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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Gifts: Finance Act 2004 changes: gifts to non settlor-interested settlements: relevant individual has interest in settlement after hold-over relief obtained

Subject to certain exceptions, any hold-over relief under TCGA92/S165 obtained in relation to a “relevant disposal” (see CG66921C) must be recovered from the donor if the relevant disposal is to the trustees of a settlement where

  • in computing the amount of the held-over gain in respect of the “relevant disposal” (assuming that no gifts hold-over relief is available on that disposal), the amount of expenditure allowed as a deduction would need to be reduced on account of gifts hold-over relief obtained under TCGA92/S165 or TCGA92/S260 in respect of an earlier disposal (whenever made) by an individual (the “relevant individual”),


  • within the “clawback period” (see CG66921C) (but after gifts hold-over relief under TCGA92/S165 was claimed by the person who made the relevant disposal) the relevant individual acquires an “interest in the settlement” (see CG66921A), or an “arrangement” (see CG66921A) comes into existence under which he or she will or may acquire an “interest in the settlement”,


  • the donor (that is the person who made the “relevant disposal”) is not an individual who has died before the “material time” (see CG66921C).

[TCGA92/S169C (1), (3), (5) and (6)]

The exceptions to this general rule are explained in CG66924.

Note that the “relevant individual” need not have any connection whatsoever to the person who made the “relevant disposal”.

CG66922+ tell you how the clawback provisions work and what consequential tax adjustments must be made. If the claim for hold-over relief under TCGA92/S165 is revoked or withdrawn, the provisions of TCGA92/S169C will apply as though the claim had never been made (see CG66919A).

[TCGA92/S169C (10)]

Officers of the Board are given powers to obtain information for the purposes of TCGA92/S169B to TCGA92/S169F. Penalty proceedings under TMA70/S98 can be taken against someone who fails to produce this information (see CG66925).