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HMRC internal manual

Investment Funds Manual

Offshore Funds: investors in non-reporting funds: computation of offshore income gain: modification of chargeable gains legislation

Regulation 41 of SI 2009/3001: Roll-over relief on transfer of business

Usually, where a ‘person’ (but not a ‘person’ who is a company) transfers a business to a company as a going concern, together with the whole assets of the business (or the whole of those assets other than cash), in exchange for shares issued by the company , any gain arising on the transfer of the assets is effectively deferred if the relevant conditions in Section 162 of TCGA 1992 are met (roll-over relief on transfer of business - see the Capital Gains Manual.

Where, however, one or more of the assets that form part of the transfer is an interest in an offshore fund, then the basic gain arising on such a disposal is computed without regard to any deduction which would otherwise fall to be made under section 162 in computing a chargeable gain - in other words, the gain is not deferred, but is immediately charged as an offshore income gain.

Relief for gifts of business assets / Gifts on which inheritance tax is chargeable etc.

Where any part of a disposal that is not on an arm’s length basis and which is subject to a claim for relief under either section 165 (relief for gifts of business assets) or section 260 of TCGA 1992 (gifts on which inheritance tax is chargeable etc - see the Capital Gains Manual for further details) the claim does not affect the computation of the basic gain arising on the disposal. In other words, no part of the basic gain can be held over.