Non-resident Company: exemptions: disposal of assets where the arrangements did not involve a tax avoidance motive - for 2012-13 and later years
A gain (or loss) arising on the disposal of an asset will be outside of the scope of TCGA92/S13 where it can be shown that neither:
- the disposal of the asset by the company nor
- the acquisition or holding of the asset by the company
formed part of a scheme or arrangements of which the main purpose or one of the main purposes, was the avoidance of liability to capital gains tax or corporation tax.
There may be a number of genuine reasons why a non-resident company is used as an investment vehicle.
For example if an individual wanted to acquire a property in another country but was prevented from doing so under the prevailing law in that country because they are non-resident there, this difficulty might be overcome by setting up a company in that territory. The company could then acquire the property as a resident.
To determine if the exemption applies a clear understanding of why the asset was acquired, held and disposed of by the company is needed.
If the motive test under TCGA92/S13(5)(cb) is satisfied (e.g. if there is no scheme of arrangements which the purpose or one of the main purposes is to avoid tax), no charge is generated under section 13.