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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Chargeable assets: intangible assets: statutory rights

Acts of Parliament may confer rights on certain persons at certain times and in certain circumstances.

Such statutory rights are assets for CG purposes when a person becomes eligible to make a claim for money or money’s worth in accordance with the relevant statutory provision.

The concept of a statutory right as an asset for CG purposes was established in Davenport v Chilver, 57TC661. The case concerned the receipt of compensation following claims under the Foreign Compensation (USSR) Order 1969 in respect of assets situated in Latvia which had been confiscated by a foreign government. The effect of the 1969 Order was to confer on the defendant (Miss Chilver) a right to share in a designated fund, subject to proof of title and value of the property. The court concluded that the 1969 Order had conferred a form of property on the taxpayer, who had owned nothing beforehand, and was therefore an asset within the meaning of section 22(1) TCGA 1992. This case is considered in more detail at CG12995.

Guidance on the treatment of capital sums derived from statutory rights is given at CG12995.

Time of acquisition

The time of acquisition of a statutory right in relation to the original owner is the time when that person became entitled under the terms of the relevant legislation to make a claim for money or money’s worth.

Allowable costs of acquisition

There are unlikely to be any costs of acquisition.

A statutory right will almost invariably be acquired otherwise than by way of a bargain made at arm’s length. However, section 17 (1) TCGA 1992 will not apply to treat it as having been acquired for a market value consideration where there is no corresponding disposal and no consideration is given for the acquisition or the consideration given is less than the market value of the right (this is the effect of section 17, subsection (2)(a), see CG14550).