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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Setting aside the chargeable gain

TCGA92/S284B (3), TCGA92/S284B (4) & TCGA92/S284B (5)As explained in CG13650 - CG13651, we do not expect chargeable gains under Section 284A(3) to arise frequently. Most taxpayers will want to follow the concessionary treatment through.

But cases may arise where a taxpayer incurs a charge under the Section, but later on would like to revert to the original concessionary basis of liability. That may be because

  • taper relief is not available on the statutory chargeable gain (TCGA92/S284B (1)), but would be available on the concessionary basis, or
  • the taxpayer wants to claim a further relief in respect of the asset disposed of, but relief is not available against the chargeable gain under Section 284A(3).If the taxpayer gives written notice, within the permitted time, that concessionary basis of liability is irrevocably accepted, see CG13658, all necessary amendments or adjustments must be made so that the taxpayer can revert to the concessionary basis. The time limit for giving notice is the latest of

  • the first anniversary of the making of the relevant assessment
  • the end of the period for amending the self-assessment or company tax return for the period in which the statutory chargeable gain accrues
  • the end of the period for making the claim to the relief which the taxpayer is seeking.

ExampleIn 1995-96 a taxpayer disposes of asset No. 1 and invokes a concession in order to roll-over the whole of the gain on to replacement asset No. 2. In 2001-02 the taxpayer disposes of asset No. 2, but does not continue with the concessionary basis of liability. A chargeable gain under TCGA92/S284A (3) therefore arises in that year. In 2003-04 the taxpayer acquires another asset which meets the conditions for a further roll-over relief claim in respect of the disposal of asset No. 2.

The chargeable gain under Section 284A(3) cannot be rolled-over, as it is not a gain on the disposal of an eligible asset. However the taxpayer can give notice that concessional treatment will, after all, be irrevocably accepted and make a roll-over relief claim within the normal time limits. If this is done the liability arising on the 2001-02 disposal is revised as if concessionary treatment had been followed throughout. The statutory charge under Section 284A(3) is eliminated and roll-over relief allowed in the normal way.

Concessionary relief not dueIt is also possible that a taxpayer could incur a chargeable gain under Section 284A(3) and then find, some time later, that in the end no concessional relief was actually allowed on the original disposal (whether that disposal was by the same taxpayer or another one). If that happens the chargeable gain under Section 284A(3) is removed automatically. Again all necessary adjustments must be made. In this situation there is no time limit within which the taxpayer must make a claim for the adjustments to be made.