Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Capital Gains Manual

Arrival in and departure from the UK: ESCD2 and UK branch or agency activities - to 5 April 2013

The benefit of the concession is withheld from certain assets related to a branch or agency activity carried on in the United Kingdom.

The concession does not apply to any individual in relation to gains on the disposal of assets which are situated in the United Kingdom and which, at any time between his departure from the United Kingdom and the end of the year of assessment, are either

  • used in or for the purposes of a trade, profession or vocation carried on by him in the United Kingdom through a branch or agency

or

  • used or held for, or acquired for use by or for the purposes of such a branch or agency.’

This restriction is at paragraph 3 of ESCD2.

Example

Mr Beynon is resident and ordinarily resident in the UK. He carries on a trade as a wholesale butcher. On 30 November 2008 he emigrates and becomes not resident and not ordinarily resident in the UK. The wholesale butchery business continues after his departure on a branch or agency basis under the control of the manager.

If he sells the assets of the business after 5 April 2009 he will be chargeable on a disposal by reason of TCGA92/S10, see CG25500+ above. This is because although the sale takes place in a year for the whole of which he is not resident and not ordinarily resident, the assets were used in a trade carried on in the UK through a branch or agency.

If, instead, he sells the assets in the period from 1 December 2008 to 5 April 2009, Section 10 cannot apply. This is because the section applies only to cases where a person is not resident and not ordinarily resident throughout the year of assessment, and Mr Beynon is resident and ordinarily resident in the UK for some part of 2008-09. However, because he is resident and ordinarily resident for that year TCGA92/S2 applies. As the assets were used for a trade carried on in the UK through a branch or agency at some time in the period between emigration and the following 5 April, ESCD2 does not apply because of its third paragraph. Therefore any gain on the disposal is charged under section 2.