Income Tax Act 2007

[F1 [F2 809VK Retention of funds to meet CGT liabilities U.K.

(1) This section applies if—

(a) there is a disposal of all or part of the holding,

(b) the disposal counts as a potentially chargeable event or is part of the appropriate mitigation steps taken in consequence of a potentially chargeable event,

(c) a chargeable gain (but not a loss) accrues to P on the disposal,

(d) P is chargeable to capital gains tax (but not corporation tax) in respect of that gain, and

(e) the actual disposal proceeds are less than Y.

(2) The difference between the actual disposal proceeds and Y is referred to in this section as “the shortfall”.

(3) “The actual disposal proceeds” means the disposal proceeds but disregarding section 809Z8(4).

(4) “Y” is the sum of—

(a) the amount (if any) that would, but for this section, be required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b), and

(b) the amount found by applying the highest potential CGT rate to the amount (computed in accordance with TCGA 1992) of the chargeable gain accruing to P on the disposal.

(5) The highest potential CGT rate is—

(a) if the chargeable gain accrues to P as the trustees of a settlement or accrues to the personal representatives of P, the rate specified in section 4(3) of TCGA 1992, and

(b) otherwise, the rate specified in section 4(4) of that Act (regardless of the rate at which income tax is chargeable in respect of P's income).

(6) If this section applies, the amount that is required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b) is reduced by the permitted amount.

(7) “The permitted amount” is so much of the shortfall as is used, within the grace period allowed for taking the disposal proceeds offshore or re-investing them, to make a deposit in respect of which a certificate of tax deposit is issued to P under section 12 of the National Loans Act 1968.

(8) A reduction may not be made under subsection (6) unless—

(a) when details of the deposit are confirmed to Her Majesty's Revenue and Customs, the confirmation letter states that this section is intended to apply to the deposit, and

(b) the amount of the deposit is no greater than the shortfall.]]

Textual Amendments

F1 Pt. 14 Ch. A1 inserted (21.7.2008 with effect in accordance with Sch. 7 para. 81 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 1 (with Sch. 7 paras. 85-89)

F2 Ss. 809VA-809VO and cross-heading inserted (17.7.2012) (with effect in accordance with Sch. 12 para. 17 of the amending Act) by Finance Act 2012 (c. 14), Sch. 12 para. 7