Commentary

C2.113 Disposal of asset subject to restrictions

Capital gains tax
Capital gains tax | Commentary

C2.113 Disposal of asset subject to restrictions

Capital gains tax | Commentary

C2.113 Disposal of asset subject to restrictions

Where an asset is disposed of to a connected person subject to restrictions which the transferor, or a person connected with him, would be entitled to enforce, the consideration is taken to be the market value of the asset1; but the market value must be adjusted in a particular way to take account of the rights or restrictions imposed2. However, this rule3 does not apply to rights or restrictions such as foreclosure under a mortgage or other charge, nor to forfeiture or other rights exercisable on breach of covenant of a lease whether of land or other property4.

To ascertain the consideration to be taken into account it is necessary first to

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