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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Location of assets: types of asset (4): intangible assets - specific assets

Where the TCGA does not otherwise apply to determine the situation of an intangible asset or whether it is situated in the UK (for instance where none of the provisions of TCGA92/S275 apply: see CG12430 - CG12450), you should consider the rules in TCGA92/S275A.

For these purposes, an intangible asset includes a right enforceable by legal action (also known as a chose in action) and anything corresponding to such a right under the law of a country outside the UK.

If the intangible asset is subject to UK law when it is created, then it is taken to be situated in the UK at all times.

But if the asset is a future or option it may be situated in the UK even if it was not subject to UK law at the time it was created. In order to establish the location of such a future or option it is necessary to consider its underlying subject matter, that is to say the property which would have to be delivered if the future were to run to delivery or the option were to be exercised. There are two ‘rules’ i.e. two sets of conditions against which the underlying subject matter must be tested.

The first rule, TCGA92/S275A(6), is that if the underlying subject matter is or includes an intangible asset which is either

  • subject to UK law when it was created and its location would not otherwise be determined or 
  • treated as being subject to UK law by virtue of a further application of the rule, then 

the future or option is treated for the purposes of TCGA92/S275A as itself being subject to UK law at the time it is created, with the result that it is taken to be situated in the UK at all times. TCGA92/S275A(5).

The second rule, TCGA92/S275(8), can only apply if the first rule does not make a future or option situated in the UK. If the underlying subject matter of the future or option is or includes an asset (not necessarily an intangible asset) which either

  • Is situated in the UK at any time by virtue of any other provision of the TCGA or 
  • Is or includes shares or securities issued by a company incorporated in the UK, but which have not been issued at the time the future or option is created or 
  • Is treated as being situated in the UK by virtue of a further application of the second rule, then 

the future or option is taken to be situated in the UK at any time when the asset which is its underlying subject matter is itself taken to be situated in the UK. (Where the underlying asset is or includes unissued shares or debentures, they are taken to be situated in the UK at all times.) TCGA92/S275A(7).