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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Repudiation of concessional relief

TCGA92/S284A (6), TCGA92/S284A (7) & TCGA92/S284A (8)

A taxpayer repudiates previous concessional relief if

  • a subsequent chargeable gain is smaller (or an allowable loss is greater) when the knock-on effect of the concession is ignored, than when it is taken into account, and
  • the taxpayer is not required to take account of the previous concession, see below.

A taxpayer must take account of the effect of a previous concession if they have givenan indication (in writing) that they accept it.

The indication of acceptance may take any form. It may be simply a return of a higher gainin a self-assessment, or a computation of the higher gain (or reduced loss), sent in inthe normal way. But any written communication which indicates that the taxpayer isfollowing through the previous concessional treatment will be sufficient.

Acceptance of concessional treatment is irrevocable. Once the acceptance has been made ataxpayer is not allowed to change their mind and, for example, amend their return orappeal against an assessment in order to go back on the acceptance.

Relevant taxpayer

The taxpayer who claimed the benefit of concessional relief may not be the one who isliable to a charge under TCGA92/S284A (3) if they fail to follow through the effect of theconcession. The chargeable gain arises to the person from whom the previous concessionaryrelief (or any part of it) should have been recovered.

For example, a taxpayer may claim concessional roll-over relief and then pass thereplacement asset to their spouse or civil partner at no gain/no loss under TCGA92/S58(1), see CG22200+. Or a company may transfer the relevant asset to a fellow group member,similarly at no gain/no loss under TCGA92/S171 (1), see CG45300+.

In each case it is the recipient spouse, civil partner or company who must either continuethe previous concessionary treatment or incur a charge under TCGA92/S284A (3) when theydispose of the asset they received on the no gain/no loss transfer.

It is also possible for both the original taxpayer, who claimed the concessionary relief,and another to be within the scope of the charge. For example, a spouse might claimroll-over relief and then transfer only half their interest in the replacement asset totheir spouse. On a later disposal either spouse would be liable to the charge unless theyfollowed through the previous concessionary relief.

Relevant disposal

A chargeable gain under Section 284A arises when any computation of a gain or loss isaffected by any previous concessionary relief, unless the relevant taxpayer continues withthe concessionary treatment. The asset in question may not be the one originally affectedby the concessionary relief.

Example

In 1992-93 a taxpayer disposes of asset No. 1 and invokes a concession in order toroll-over the whole gain on to replacement asset No. 2. In 1997-98 the taxpayer disposesof asset No. 2 and rolls the whole gain including the additional element of the gainresulting from the original concessionary relief on to asset No. 3. In 2003-04 thetaxpayer disposes of asset No. 3.

The gain on the disposal in 2003-04 is affected by the original concession, because theallowable base cost should be restricted by the amount of the initial relief. In practicethis taxpayer is likely to continue to follow through the effect of the earlier relief.But if that did not happen a chargeable gain would arise in 2003-04, even though asset No.3 was not directly involved in the original concessionary roll-over claim.