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HMRC internal manual

Capital Gains Manual

Capital sums derived from assets: interaction of sections 22(1) and 251(1) TCGA 1992

There may be a question as to whether section 251(1) TCGA 1992 applies to prevent a gain on a disposal under section 22(1) from being a chargeable gain, on the grounds that the right to receive the capital sum constituted a debt owed to the recipient immediately before it was paid.

HMRC considers that section 22(1) applies in such cases because the capital sum derived from intangible rights held by the recipient which subsequently matured into a debt. As the intangible rights are not themselves a debt within section 251(1) any gain which accrues is a chargeable gain. This view is supported by Lord Fraser’s comments in Marren v Ingles 54TC76 at page 100, where he concludes that what is now section 251(1) TCGA 1992 only applies to obligations which had been debts from the time they came into existence or were acquired by the taxpayer.