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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
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Non-resident companies: basic conditions for TCGA92/S13: the participator

TCGA92/S13 applies to persons who were participators at the time the company made the gain and were also resident or ordinarily resident* in the United Kingdom at that time. For gains accruing to a company before 6 April 2008 it was also necessary for an individual participator to be domiciled in the UK: this requirement was repealed by Finance Act 2008.

Under TCGA92/S13(12) participator has the same meaning as given by ICTA88/S417(1).

In relation to any company, a participator is a person having a share or interest in the capital or income of the company including

  • any person who possesses, or is entitled to acquire, share capital or voting rights in the company
  • any loan creditor of the company
  • any person who possesses, or is entitled to acquire, a right to receive or participate in distributions of the company
  • any person who is entitled to secure that income or assets (whether present or future) of the company will be applied directly or indirectly for their benefit.

For detailed guidance on the meaning of participator see CT6110-CT6113.

So after 5 April 2008 TCGA92/S13 will apply to participators who are

  • individuals resident or ordinarily resident* in the UK
  • companies resident in the UK
  • trustees who are resident or ordinarily resident* in the UK
  • trustees who are neither resident nor ordinarily resident* in the UK, see CG57395
  • within any of the four categories mentioned above and who have an indirect interest in the non- resident close company making the gain. An indirect interest is a holding of shares or other interest in a company which in turn owns shares of or has an interest in the non- resident closely controlled company, either directly or through one or more closely controlled companies. For guidance on indirect interests, see CG57290.

A Statutory Residence Test for individuals was introduced for years from 6/4/2013.

*For 2013/14 and later years ordinary residence does not need to be considered.

Guidance on the Statutory Residence Test can be found in the RDR3 Guidance Note: Statutory Residence Test (SRT).