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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Introduction and computation: computation: consideration for disposal: Apportionment when assets disposed of in a series of transactions

In some circumstances the Capital Gains Tax legislation contains specific rules which explain how an apportionment of the consideration, or of the gain, is to be carried out. For example, there are rules for apportioning expenditure in cases involving part-disposals, see CG12730P. In other cases, there are no specific rules but you can use the general apportionment rule in TCGA92/S52 (4).

Section 52(4) allows any ‘necessary’ apportionment to be made on a ‘just and reasonable’ basis.

Before the introduction of Self Assessment Section 52(4) provided for the Inspector to determine the method of apportionment initially, with an appeal available to the Commissioners . The legislation has been changed for Self Assessment so that it is now the taxpayer who initially determines the method of apportionment.

This guidance explains when an apportionment is ‘necessary’ and what is meant by ‘just and reasonable’?

An apportionment is often necessary where a number of assets are sold under a single contract for one figure of consideration. It may also be necessary where an asset only partly qualifies for a relief or exemption, see, for example, CG64899 on apportionment and private residence relief.

Other examples include cases where:

  • all or part of a business has been disposed of and a separate figure for goodwill is needed, see CG68050
  • compensation is received on the compulsory acquisition of land, see CG72110
  • an earlier part-disposal was chargeable under Case VII of Schedule D, see CG14331
  • the asset disposed of qualified for capital allowances, see CG15445.

The Corporate Intangibles Research and Development Manual explains the importance of the valuation of intangible assets, including where an apportionment is required, in that regime, see CIRD10240.