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HMRC internal manual

Capital Gains Manual

Consideration for disposal: market value rule: objective indicators

The test which must be satisfied is subjective: the test is whether there was an intention to confer a gratuitous benefit or ‘give bounty’. There are objective pointers which may indicate the underlying intention. The following list (which is not exhaustive) suggests information which you may need to consider:

  • the presence or absence of real negotiations between the parties about the terms of the transaction
  • how the terms of the transaction compare with those in similar commercial transactions
  • whether the parties have separate legal or other professional representation
  • whether the parties have received independent advice
  • the character of any comparable prior dealings between the parties
  • whether the transaction between the parties may be linked with any other transaction between the same parties
  • the relationship between the parties outside the transaction in question.

It is important to consider all of the available evidence.