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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Deferred consideration: unascertainable: tax cases

The capital gains treatment of unascertainable future consideration was established in two important tax cases, Marson v Marriage (54TC59) and Marren v Ingles (54TC76).

Both cases concerned agreements for the sale of assets in which the vendor received a quantified amount of money plus a conditional and unquantifiable further amount payable at an unascertained future date. The point in dispute in both cases was whether any chargeable gain arose when the further amounts were received.

In Marson v Marriage, Justice Fox held that TCGA92/S48 applies when the sum to be brought into account represents ascertainable consideration even when the right to it is contingent. It does not apply when the amount is unascertainable.

Several principles were established in Marren v Ingles:

  • the right to receive future unascertainable payments is a `chose in action’. This is an incorporeal asset which is a chargeable asset for Capital Gains Tax purposes,
  • when the future amounts are ascertained and received they are `capital sums derived from assets’ within TCGA92/S22,
  • the future sums received are not payments in satisfaction of a debt within the terms of TCGA92/S251.