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HMRC internal manual

Capital Gains Manual

Settlement - TCGA92/S87


TCGA92/S87 uses the definition of settlement in ITTOIA/S620. This defines settlement as including “any disposition, trust, covenant, arrangement or transfer of assets”. The practical effect of using this definition is that the courts have limited the scope of “settlement” to the case where there is some element of bounty, see TSEM4105. This means that a trust established as a genuine commercial arrangement by a company to attract, retain and motivate good staff would not be within section 87. HMRC published this view in Tax Bulletin 16.

Section 87 applies to any non-resident settlement whenever it was made. When section 87 was introduced in 1981 it did not apply to capital payments received before 10 March 1981. This transitional rule is preserved in FA08/Sch7para 116 but is very unlikely to apply in practice.