Taxes Consolidation Act 1997 Schedule 20 paragraph 8

How to compute the gain on a disposal involving an equalisation element

Paragraph 8 of Schedule 20 sets out how to compute the Part 1 gain on a disposal involving an equalisation element in an offshore fund.

• The Part 1 gain is calculated by treating the disposal of an interest in an equalisation fund as though it were a disposal of an interest in a non-qualifying offshore fund.
• Share-for-share exchanges that would not normally constitute a disposal are nevertheless treated as disposals for the purpose of computing the Part 1 gain.
• Where a no gain/no loss rule applies to the disposal (other than one caused by indexation), the actual gain or loss is used instead when computing the Part 1 gain.
• These modifications apply solely for the purpose of determining the Part 1 gain and do not affect the treatment of any earlier disposal.