Section 747 Deduction of offshore income gain in determining capital gain
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(1) This section shall apply where a disposal (being a disposal to which this Chapter applies) gives rise to an offshore income gain and, if that disposal also constitutes the disposal of the interest concerned for the purposes of the Capital Gains Tax Acts, that disposal is referred to in this section as "the disposal for the purposes of the Capital Gains Tax Acts".
Can I be double charged on a gain accrued over a period that straddles 1 April 1990?
(1) This prevents a double charge on gains accrued over a period that straddles 1 April 1990. The part of the gain accrued up to 1 April 1990 is taxed as a chargeable gain. The part of the gain accrued after that date is taxed as an offshore income g...
(2) So far as relates to an offshore income gain which arises on a material disposal (within the meaning of Part 1 of Schedule 20), subsections (3) and (4) shall apply in relation to the disposal for the purposes of the Capital Gains Tax Acts in substitution for section 551(2).
What rules apply to a material deposit of a fund which does not operate equalisation arrangements?
(2) In relation to a material disposal (a disposal of a material interest in an offshore fund that does not operate equalisation arrangements), the rules in (3) and (4) apply in place of the rules in section 551 (which ensures revenue receipts taxed ...
(3) Subject to subsections (4) to (7), in the computation in accordance with the Capital Gains Tax Acts of any gain accruing on the disposal for the purposes of those Acts, a sum equal to the offshore income gain shall be deducted from the sum which would otherwise constitute the amount or value of the consideration for the disposal.
(4) Where the disposal for the purposes of the Capital Gains Tax Acts is of such a nature that by virtue of section 557 an apportionment is to be made of certain expenditure, no deduction shall be made by virtue of subsection (3) in determining for the purposes of the apportionment in section 557(2) the amount or value of the consideration for the disposal.
How is deductible expenditure treated on a part disposal?
(4) On a part disposal of an asset, deductible expenditure is reduced in proportion to the part disposed of (section 557). The consideration for the part disposed of is not to be reduced by the amount of the offshore income gain. Instead, the apporti...
(5) Where the disposal for the purposes of the Capital Gains Tax Acts forms part of a transfer to which section 600 applies, then, for the purposes of subsection (5)(b) of that section, the value of the whole of the consideration received by the transferor in exchange for the business shall be taken to be what it would be if the value of the consideration (other than shares so received by the transferor) were reduced by a sum equal to the offshore income gain.
How does an offshore income gain interact with the relief on transfer of a business to a company?
(5) Where a business is transferred to a company partly for shares and partly for other consideration, the part of the gain to which the new consideration relates is charged immediately; the part of the gain to which the new shares relate may be defe...
(6) Where the disposal to which this Chapter applies constitutes such a disposal by virtue of section 741(6) or 742(5), the Capital Gains Tax Acts shall apply as if an amount equal to the offshore income gain to which the disposal gives rise were given (by the person making the exchange concerned) as consideration for the new holding (within the meaning of section 584(1)).
How is an offshore income gain treated in cases of company amalgamation or reconstruction?
(6) On a company amalgamation or reconstruction, if old shares are exchanged for new shares, there is no disposal of the old shares. The new shares are treated as if they were the equivalent old shares, and they take the acquisition date and cost of ...
(7) In any case where―
(a) a disposal to which this Chapter applies by virtue of subsection (3) of section 742 is made otherwise than to the offshore fund concerned or to the persons referred to in subsection (2)(b) of that section,
(b) subsequently a distribution referable to the asset disposed of is paid either to the person who made the disposal or to a person connected with such person, and
(c) the disposal gives rise (in accordance with Part 2 of Schedule 20) to an offshore income gain,
then, for the purposes of the Tax Acts, the amount of the first distribution within paragraph (b) shall be taken to be reduced or, as the case may be, extinguished by deducting from such amount an amount equal to the offshore income gain referred to in paragraph (c) and, if that amount exceeds the amount of that first distribution, the balance shall be set against the second and, where necessary, any subsequent distribution within paragraph (b) until the balance is exhausted.
What is the tax treatment where there is a disposal of an interest in a non-qualifying offshore fund that operates equalisation arrangements?
(7) No double charge arises in the case of a disposal of an interest in a non-qualifying offshore fund that operates equalisation arrangements to a person other than the fund or the fund managers (for example to a connected person, or a deemed dispos...
