SCHEDULE 15Charge to income tax on benefits received by former owner of property
Chattels
6
(1)
This paragraph applies where—
(a)
an individual (“the chargeable person”) is in possession of, or has the use of, a chattel, whether alone or together with other persons, and
(b)
the disposal condition or the contribution condition is met as respects the chattel.
(2)
The disposal condition is that—
(a)
at any time after 17th March 1986 the chargeable person had (whether alone or jointly with others) owned—
(i)
the chattel, or
(ii)
any other property the proceeds of the disposal of which were (directly or indirectly) applied by another person towards the acquisition of the chattel, and
(b)
the chargeable person disposed of all or part of his interest in the chattel or other property otherwise than by an excluded transaction.
(3)
The contribution condition is that at any time after 17th March 1986 the chargeable person had directly or indirectly provided, otherwise than by an excluded transaction, any of the consideration given by another person for the acquisition of—
(a)
the chattel, or
(b)
any other property the proceeds of the disposal of which were (directly or indirectly) applied by another person towards the acquisition of the chattel.
(4)
For the purposes of this paragraph, a disposition which creates a new interest in a chattel out of an existing interest in a chattel is to be taken to be a disposal of part of the existing interest.
(5)
Where this paragraph applies to a person in respect of the whole or part of a year of assessment, an amount equal to the chargeable amount determined under paragraph 7 is to be treated as income of his chargeable to income tax.
7
(1)
For any taxable period the chargeable amount in relation to any chattel is the appropriate amount (as determined under sub-paragraph (2)), less the amount of any payments which, in pursuance of any legal obligation, are made by the chargeable person during the period to the owner of the chattel in respect of the possession or use of the chattel by the chargeable person.
(2)
The appropriate amount is—
where—
N is the amount of the interest that would be payable for the taxable period if interest were payable at the prescribed rate on an amount equal to the value of the chattel as the valuation date,
DV is—
(a) in a case falling within paragraph 6(2)(a)(i), the value as at the valuation date of the interest in the chattel that was disposed of as mentioned in paragraph 6(2)(b) by the chargeable person or, where the disposal was a non-exempt sale, the appropriate proportion of that value,
(b) in a case falling within paragraph 6(2)(a)(ii), such part of the value of the chattel at the valuation date as can reasonably be attributed to the property originally disposed of by the chargeable person or, where the original disposal was a non-exempt sale, to the appropriate proportion of that property, and
(c) in a case falling within paragraph 6(3), such part of the value of the chattel at the valuation date as can reasonably be attributed to the consideration provided by the chargeable person, and
V is the value of the chattel at the valuation date.
(3)
The disposal by the chargeable person of an interest in a chattel is a “non-exempt sale”if (although not an excluded transaction) it was a sale of his whole interest in the chattel for a consideration paid in money in sterling or any other currency; and, in relation to a non-exempt sale, “the appropriate proportion” is—
where—
MV is the value of the interest in the chattel at the time of the sale;
P is the amount paid.
(4)
Regulations may, in relation to any valuation date, provide for a valuation of the chattel or any interest in the chattel by reference to an earlier valuation date to apply subject to any prescribed adjustments.
(5)
In this paragraph—
“the taxable period” means the year of assessment, or part of a year of assessment, during which paragraph 6 applies to the chargeable person;
“the valuation date”, in relation to a taxable period, means such date as may be prescribed.