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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Company reconstructions: company: TCGA92 S139: dual resident company

TCGA92/S139 does not apply to the transfer of certain assets to dual resident companies. A dual resident company may be covered by a double taxation agreement which gives the overseas country the exclusive right to tax capital gains on specific assets. If Section 139 applied to the transfer of such assets any gain on an eventual disposal of the asset by the acquiring company would be outside the charge to United Kingdom tax. For this reason Section 139(3) prevents Section 139 from applying to the transfer of assets covered by such double taxation agreements to dual resident companies.

Dual resident companies have been treated as not resident in the UK for tax purposes since 1993, see CG42303.