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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Consideration for disposal: market value rule: subjective intention test

The subjective intention test does not need to be used if there is both a disposal and an acquisition between connected persons. The connected persons rule, TCGA92/S18, states that this type of transaction shall be treated as if it were otherwise than by way of a bargain made at arm’s length.

The test will have to be used if there is

  • a transaction between unconnected persons, or
  • a transaction between connected persons, where there is

    • either an acquisition with no corresponding disposal, for example a share issue
    • or a disposal with no corresponding acquisition, for example the redemption of a debt.