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HMRC internal manual

Capital Gains Manual

Non-resident companies: TCGA92/S13: amount assessable

If the basic conditions described in CG57220-CG57222 are satisfied you compute the amount attributable to the UK resident participators as follows.

Step 1

Calculate the chargeable gain that would have arisen to the non-resident company if it had been resident in the UK. The normal computational rules including those on indexation allowance and rebasing apply. However, the computation is to be made as if the non-resident company were a UK resident company within the charge to Corporation Tax. Therefore, indexation allowance is given without freezing, see CG17207. See CG57381 if any foreign tax is payable by the non-resident company in respect of the gain.

Step 2

Determine the interests of all participators, including any who are not resident in the UK, by applying those tests of participation appropriate to the circumstances.

Step 3

Calculate the proportion of the gain apportionable to the interests of each participator.

Step 4

Consider whether the gains calculated in Step 3 represents a just and reasonable apportionment. If not, re-apportion the gains taking account of all relevant factors to arrive at an apportionment that is just and reasonable. The total amount apportioned must not exceed the chargeable gain computed for the company at Step 1.

In more complex cases it will be helpful to prepare a table or matrix at Step 3 so that the interests of each participator by reference to the tests that are appropriate to the circumstances of the particular case can be readily identified, see Example 4, CG57283. This will simplify the process of making an initial apportionment.