Taxes Consolidation Act 1997 section 747

Deduction of offshore income gain in determining capital gain

Section 747 prevents a double charge to tax where a disposal of a material interest in an offshore fund gives rise to both an offshore income gain and a chargeable gain for capital gains tax purposes.

• The offshore income gain is deducted from the disposal proceeds used in the CGT computation, so that no part of the gain is taxed twice.
• On a part disposal, the apportionment of acquisition expenditure under section 557 is based on the full consideration, not the reduced amount.
• Where a business is transferred to a company for shares and other consideration under section 600, the total consideration used in the deferral formula is also reduced by the offshore income gain.
• On a share-for-share exchange that triggers an offshore income gain, the gain is treated as additional acquisition cost of the new shares, preventing a double charge on their later disposal.