Section 3: Gains attributed to UK resident individuals etc, Taxation of Chargeable Gains Act 1992

This section applies if—

a chargeable gain accrues at any time to a non-UK resident close company,

the gain is connected to avoidance (see section 3A),

the gain is not connected to a foreign trade or other economically significant foreign activities (see section 3A), and

apart from this section, some or all of the gain would not be chargeable to corporation tax on the company.

So much of the gain as would not otherwise be so chargeable is apportioned among participators, or indirect participators, in the company—

who are resident in the United Kingdom at that time, or

who are trustees of a settlement and are not resident in the United Kingdom at that time.

The proportion of the amount of the gain to be apportioned to each person corresponds to the extent of the person's interest in the company as a participator or indirect participator.

The amount apportioned to each person is treated as a chargeable gain accruing to the person.

No apportionment of any part of a gain is made to an individual if—

the gain accrues in a tax year which, as respects the individual, is a split year, and

the gain accrues in the overseas part of the year.

No apportionment of any part of a gain is made to a person if the total amount that would, apart from this subsection, be apportioned to—

the person, and

persons connected to the person,

is 25% or less of the amount of the gain falling to be apportioned.

A person ("P") is an "indirect participator" in a company ("A") if—

another company ("B") which is a non-UK resident close company is a participator in A, and

P is a participator in B or P is a participator in a third non-UK resident close company which is participator in B,

and so on through any number of non-UK resident close companies that are participators in other non-UK resident close companies.

P's interest as an indirect participator in A in the case of any gain is determined by—

apportioning the gain among the participators in A according to the extent of their respective interests as participators, and

then further apportioning the gain apportioned to B among the participators in B according to the extent of their respective interests as participators, and so on through other companies.

So far as it would go to reduce or extinguish chargeable gains accruing, as a result of this section, to a person in a chargeable period, this section applies to a loss accruing to the company on the disposal of an asset in that period as it would apply if there had been a gain.

But—

this only applies in relation to that person, and

this section does not otherwise apply in relation to losses accruing to the company.

In this section "a non-UK resident close company" means a company—

which is not resident in the United Kingdom, and

which would be a close company if it were resident in the United Kingdom.

Section 3: Gains attributed to UK resident individuals etc

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