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HMRC internal manual

Investment Funds Manual

Offshore Funds: deduction of offshore income gains in computing capital gains: consideration on a reorganisation (S128 TCGA 1992)

Regulation 47 of SI 2009/3001

Where there is a disposal which gives rise to an offshore income gain and that disposal arises as a result of —

  • regulation 36A (exchanges and schemes of reconstruction or amalgamation involving issue of securities - see IFM13286 and IFM13386), or
  • regulation 37 (exchange of interests of different classes - see IFM13288 and IFM13388),

then TCGA 1992 has effect as if an amount equal to the offshore income gain to which that disposal gives rise was given (by the person making the exchange) as consideration for the new holding (within the meaning of section 128 of TCGA (consideration given or received for new holding on a reorganisation)).

The effect of this is to treat the offshore income gain (for TCGA purposes) as additional consideration given for the original holding, thus reducing the eventual gain on disposal of the new holding by the amount of the offshore income gain (see section 128 TCGA).