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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Arrival in and departure from the UK: establishing the correct time when a gain arises: delayed written contracts

The most common situation is for the individual to negotiate the terms for a disposal but to delay signing the written contract until after the date of departure from the UK. One indicator that this may have happened will be if there is a very short interval between the date their residence position changes and the date the contract is signed.

Cases have been seen where the vendor leaves the United Kingdom with a copy of the contract in his possession and posts it from the foreign airport on arrival there. Alternatively, he gives his solicitor a power of attorney under which the solicitor can sign and exchange the contracts on behalf of the vendor once he is outside the United Kingdom. There are many other variations.

In most straightforward cases, where there is no question of a continuing business or where arrangements have not been entered into to use ESCD2 to avoid tax (for years up to and including 2012-13), it will not be possible to show there is liability to Capital Gains Tax. An agreement, oral or written, which remains ‘subject to contract’ is not a binding contract.

Where a formal written contract is entered into after emigration, there is a presumption that the parties intend to leave the transfer unagreed until that time even if it is not explicitly ‘subject to contract’. It may be possible to displace that presumption if evidence can be obtained either that the benefit of ESCD2 is being sought as a means of avoidance (for years up to and including 2012-13), see CG25793, or that the disposal was not in fact conditional or ‘subject to contract’ at the time of emigration, see CG25805.