Part II General Provisions relating to computation of gains and acquisitions and disposals of assets
Chapter II Assets and disposals of assets
General provisions
C4C1C2C3C5C624 Disposals where assets lost or destroyed, or become of negligible value.
1
Subject to the provisions of this Act and, in particular to F2sections 140A(1D), 140E(7) and 144, the occasion of the entire loss, destruction, dissipation or extinction of an asset shall, for the purposes of this Act, constitute a disposal of the asset whether or not any capital sum by way of compensation or otherwise is received in respect of the destruction, dissipation or extinction of the asset.
F31A
A negligible value claim may be made by the owner of an asset (“P”) if condition A or B is met.
1B
Condition A is that the asset has become of negligible value while owned by P.
1C
Condition B is that—
a
the disposal by which P acquired the asset was a no gain/no loss disposal,
b
at the time of that disposal the asset was of negligible value, and
c
between the time when the asset became of negligible value and the disposal by which P acquired it, each other disposal (if any) of the asset was a no gain/no loss disposal.
F12
F4Where a negligible value claim is made:
a
this Act shall apply as if the claimant had sold, and immediately reacquired, the asset at the time of the claim or (subject to paragraphs (b) and (c) below) at any earlier time specified in the claim, for a consideration of an amount equal to the value specified in the claim.
b
An earlier time may be specified in the claim if:
i
the claimant owned the asset at the earlier time; and
ii
the asset had become of negligible value at the earlier time; and either
iii
for capital gains tax purposes the earlier time is not more than two years before the beginning of the year of assessment in which the claim is made; or
iv
for corporation tax purposes the earlier time is on or after the first day of the earliest accounting period ending not more than two years before the time of the claim.
c
Section 93 of and Schedule 12 to the Finance Act 1994 (indexation losses and transitional relief) shall have effect in relation to an asset to which this section applies as if the sale and reacquisition occurred at the time of the claim and not at any earlier time.
3
For the purposes of F5this section, a building and any permanent or semi-permanent structure in the nature of a building may be regarded as an asset separate from the land on which it is situated, but F6where a building or structure is so regarded, the person deemed to make the disposal of the building or structure shall be treated as if he had also sold, and immediately reacquired, the site of the building or structure (including in the site any land occupied for purposes ancillary to the use of the building or structure) for a consideration equal to its market value at that time.
F74
For the purposes of subsection (1C), a no gain/no loss disposal is one which, by virtue of any of the no gain/no loss provisions, neither a gain nor a loss accrues to the person making the disposal.