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HMRC internal manual

Capital Gains Manual

Deferred consideration: ascertainable: consideration irrecoverable


Section 48 requires the full amount of the consideration for the disposal of an asset to be brought into the computation

  • without any discount for postponement of the right to receive any part of it and
  • without regard to a risk of any part of it being irrecoverable, and
  • without regard to the right to receive any part of the consideration being contingent.

The effect is to prevent any argument that some part of the consideration provided for in a contract for the disposal of an asset can be left out of account because payment is deferred or might be at risk or might not be made in some circumstances.

Section 48 was described in Marson v Marriage (54 TC 59) as `an onerous provision’. It is mitigated by an entitlement to relief if a claim is made that any part of the consideration brought into account subsequently proves to be permanently irrecoverable.

There is a detailed discussion of the scope of Section 48 in the Court of Appeal decision in Goodbrand v Loffland Brothers North Sea Inc. ([1998]STC930). In a useful judgement that explains the purpose and scope of Section 48 Millett LJ described it as `a necessary and proper provision for the protection of the revenue’.

The immediate effect of the decision is that where consideration for a disposal is payable in foreign currency that currency is to be brought into account at its value at the date of disposal. If the value of the currency subsequently falls, so that its value on receipt is less than the value brought into the account, the shortfall is not irrecoverable consideration and no claim can be made under Section 48.

More generally, where consideration for a disposal takes the form of money’s worth, so that it has to be valued at the time of the disposal for the purpose of the computation, any shortfall in the value of that money’s worth on receipt cannot give rise to a claim under Section 48. Section 48 applies only where some or all of the actual consideration due under the contract is irrecoverable.