Commentary

C2.116 Value of asset reduced before disposal

Capital gains tax
Capital gains tax | Commentary

C2.116 Value of asset reduced before disposal

Capital gains tax | Commentary

C2.116 Value of asset reduced before disposal

Special provisions apply where, as a result of a scheme or arrangements, the value of an asset disposed of has been materially reduced and any person has received a tax-free benefit; the scheme or arrangements may be made before or after the disposal1.

A benefit is conferred on a person if he becomes entitled to any money, money's worth, increase in the value of an asset or release from any liability and is tax-free unless he is required to take it into account in computing his liability to income tax, corporation tax or capital gains tax2.

The provisions do not apply:

  1.  

    •     where the reduction in value occurred before 29 March 19773

  2.  

    •     where the disposal takes place between4:

    1.  

      –     spouses or civil partners living together

    2.  

      –     personal representatives and legatees, or

    3.  

      –     companies in a group

  3.  

    •     if the tax-free benefit is obtained by a person other than the person making the disposal and the avoidance

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