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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Computation: date of disposal: oral contracts

A contract, other than a contract in respect of land, need not necessarily be in writing. An oral contract may not be enforceable, but this does not prevent it from being a contract of disposal for Capital Gains Tax purposes. There is authority for this in the case of Thompson v Salah, 7TC559: the principles of this case apply for Capital Gains Tax purposes although it concerned Case VII Schedule D (short term gains).

Thompson v Salah involved an oral contract for the sale of land. It was possible for all contracts in respect of land to be oral up to 26 September 1989. With effect from 27 September 1989 onwards, however, the Law of Property (Miscellaneous Provisions) Act 1989 requires all contracts in respect of land in England and Wales to be in writing.

In considering whether an oral contract for sale existed, you will need to examine the facts of the case carefully, by reference to such documents and correspondence as exist, and in the light of the actions of the parties. The basic question will be whether the facts are consistent with an agreement which was binding on the parties.