(1)This section applies to a disposal of an asset which was held on 31st March 1982 by the person making the disposal.
(2)[F1In] computing for the purpose of this Act the gain or loss accruing on the disposal it shall be assumed that the asset was on 31st March 1982 sold by the person making the disposal, and immediately reacquired by [F2that person], at its market value on that date.
[F3(2A)For the purposes of corporation tax, subsection (2) above has effect subject to subsections (3) to (8) below (and see also subsections (9) and (10)).]
(3)Subject to subsection (5) below, subsection (2) above shall not apply to a disposal—
(a)where a gain would accrue on the disposal to the person making the disposal if that subsection did apply, and either a smaller gain or a loss would so accrue if it did not,
(b)where a loss would so accrue if that subsection did apply, and either a smaller loss or a gain would accrue if it did not,
(c)where, either on the facts of the case or by virtue of Schedule 2, neither a gain nor a loss would accrue if that subsection did not apply, F4...
[F5(ca)where, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal, or]
(d)where neither a gain nor a loss would accrue by virtue of any of [F6the no gain/no loss provisions.]
[F7(4)Where in the case of a disposal of an asset—
(a)the effect of subsection (2) above would be to substitute a loss for a gain or a gain for a loss, but
(b)the application of subsection (2) is excluded by subsection (3),
it shall be assumed in relation to the disposal that the asset was acquired by the person making the disposal for a consideration such that, on the disposal, neither a gain nor a loss accrues to [F8that person].
(5)If a person so elects, disposals made by [F9that person] (including any made by [F9that person] before the election) shall fall outside subsection (3) above (so that subsection (2) above is not excluded by that subsection).
(6)An election by a person under subsection (5) above shall be irrevocable and shall be made by notice to [F10an officer of the Board] at any time before 6th April 1990 or at any time during the period beginning with the day of the first relevant disposal and ending—
[F11(a)F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(aa)F13... 2 years after the end of the accounting period in which the disposal is made; or
(b)F14... at such later time as the Board may allow;]
and “the first relevant disposal” means the first disposal to which this section applies which is made by the person making the election.
(7)An election made by a person under subsection (5) above in one capacity does not cover disposals made by [F15that person] in another capacity.
(8)All such adjustments shall be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under subsection (5) above.
(9)Schedule 2 shall have effect [F16for the purposes of corporation tax] in relation to disposals of assets owned on 6th April 1965 in cases where neither subsection (2) nor subsection (4) above applies.
(10)Schedule 3, which contains provisions supplementary to subsections (1) to (8) above, shall have effect [F17for the purposes of capital gains tax and corporation tax].]
Textual Amendments
F1Word in s. 35(2) substituted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(2)(a)
F2Words in s. 35(2) substituted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(2)(b)
F3S. 35(2A) inserted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(3)
F4Word in s. 35(3)(c) omitted (with effect in accordance with Sch. 40 para. 8 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 40 para. 2(a)
F5S. 35(3)(ca) inserted (with effect in accordance with Sch. 40 para. 8 of the amending Act) by Finance Act 2009 (c. 10), Sch. 40 para. 2(b)
F6Words in s. 35(3)(d) substituted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(4)
F7S. 35(3)(d)(xvi) inserted (E.W.S.) (8.6.2005 for specified purposes, 24.7.2005 in so far as not already in force) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 33; S.I. 2005/1444, art. 2(1), Sch. 1; S.I. 2005/1909, art. 2, Sch.
F8Words in s. 35(4) substituted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(5)
F9Words in s. 35(5) substituted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(6)
F10Words in s. 35(6) substituted (with effect in accordance with s. 135(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 35(a)
F11S. 35(6)(a)(aa)(b) substituted for s. 35(6)(a)(b) (with effect in accordance with s. 135(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 35(b)
F12S. 35(6)(a) omitted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 58(7)(a)
F13Words in s. 35(6)(aa) omitted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 58(7)(b)
F14Words in s. 35(6)(b) omitted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 58(7)(c)
F15Words in s. 35(7) substituted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(8)
F16Words in s. 35(9) inserted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(9)
F17Words in s. 35(10) inserted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 58(10)
(1)This section applies for the purposes of capital gains tax in relation to a disposal of an asset if—
(a)the person making the disposal acquired the asset after 31 March 1982 and before 6 April 2008,
(b)the disposal by which the person acquired the asset (“the relevant disposal”), and any previous disposal of the asset after 31 March 1982, was a disposal on which, by virtue of any enactment, neither a gain nor a loss accrued to the person making the disposal, and
(c)section 35(2) did not apply to the relevant disposal.
(2)It is to be assumed that section 35(2) did apply to the relevant disposal (and that section 56(2) applied to the relevant disposal accordingly).]
Textual Amendments
F18S. 35A inserted (with effect in accordance with Sch. 2 para. 71 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 59
Schedule 4, which provides for the reduction of a deferred charge to [F19corporation tax in respect of chargeable gains] where the charge is wholly or partly attributable to an increase in the value of an asset before 31st March 1982, shall have effect.
Textual Amendments
F19Words in s. 36 substituted (with effect in accordance with Sch. 2 para. 76 of the amending Act) by Finance Act 2008 (c. 9), Sch. 2 para. 73