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Part VIIU.K. Other property, businesses, investments etc.

Employee share ownership trustsU.K.

232 Chargeable event when replacement assets owned.U.K.

(1)Subsection (3) below applies where—

(a)the provisions of section 229(1) or (3) are applied,

(b)a chargeable event occurs in relation to the trustees on or after the date on which the disposal is made (and whether the event occurs before or after the provisions are applied),

(c)the claimant was neither an individual who died before the chargeable event occurs nor trustees of a settlement which ceased to exist before the chargeable event occurs, and

(d)the condition set out below is fulfilled.

(2)The condition is that, at the time the chargeable event occurs, the claimant or a person then connected with him is beneficially entitled to all the replacement assets.

(3)In a case where this subsection applies, the claimant or connected person (as the case may be) shall be deemed for all purposes of this Act—

(a)to have disposed of all the replacement assets immediately before the time when the chargeable event occurs, and

(b)immediately to have reacquired them,

at the relevant value.

(4)The relevant value is such value as secures on the deemed disposal a chargeable gain equal to—

(a)the amount by which the amount or value of the consideration mentioned in section 229(1)(b) was treated as reduced by virtue of that provision (where it applied), or

(b)the amount by which the amount or value of the consideration mentioned in section 229(3)(b) was treated as reduced by virtue of that provision (where it applied).

(5)In a case where subsection (3) above would apply if “all" read “any of" in subsection (2) above, subsection (3) shall nevertheless apply, but as if—

(a)in subsection (3)(a) “all the replacement assets" read “ the replacement assets concerned ”, and

(b)the relevant value were reduced to whatever value is just and reasonable.

(6)Subsection (7) below applies where—

(a)subsection (3) above applies (whether or not by virtue of subsection (5) above), and

(b)before the time when the chargeable event occurs anything has happened as regards any of the replacement assets such that it can be said that a charge has accrued in respect of any of the gain carried forward by virtue of section 229(1) or (3).

(7)If in such a case it is just and reasonable for subsection (3) above to apply as follows, it shall apply as if—

(a)the relevant value were reduced (or further reduced) to whatever value is just and reasonable, or

(b)the relevant value were such value as secures that on the deemed disposal neither a gain nor a loss accrues (if that is just and reasonable);

but paragraph (a) above shall not apply so as to reduce the relevant value below that mentioned in paragraph (b) above.

(8)For the purposes of subsection (6)(b) above the gain carried forward by virtue of section 229(1) or (3) is the gain represented by the amount which by virtue of either of those provisions falls to be deducted from the expenditure allowable in computing a gain accruing on the disposal of replacement assets (that is, the amount found under subsection (4)(a) or (b) above, as the case may be).

(9)In this section “chargeable event” in relation to trustees has the meaning given by section 69 of the M1Finance Act 1989.

Marginal Citations