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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Enhancement expenditure: reflected in state/nature of asset at disposal

Lord Emslie commented on this test in Aberdeen Construction Group Ltd v CIR, (52TC281) at page 290

` ….. what [Section 38(1)(b)] is looking for is, as the result of relevant expenditure, an identifiable change for the better in the state or nature of the asset, and this must be a change distinct from the enhancement of value’

Where the asset is shares, we would be looking for an alteration in, say, the rights attaching to those shares.

For the purpose of this test, the date of disposal is to be taken as the date of completion and not the date of contract.