Section 3A: Gains connected to avoidance or foreign activities etc, Taxation of Chargeable Gains Act 1992

A gain accruing to a company on the disposal of an asset is taken to be "connected to avoidance" unless it is 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 avoidance of liability to capital gains tax or corporation tax.

A gain is "connected to a foreign trade" if it accrues on the disposal of an asset used only—

for the purposes of a trade carried on by the company wholly outside the United Kingdom, or

for the purposes of the foreign part of a trade carried on by the company partly within, and partly outside, the United Kingdom,

and the reference here to the foreign part of a trade is to the part of the trade carried on outside the United Kingdom.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

A gain accruing on the disposal of an asset is "connected to other economically significant foreign activities" if—

the asset is used only for the purposes of activities carried on by the company wholly or mainly outside the United Kingdom,

the activities consist of the provision of goods or services on a commercial basis, and

the activities also satisfy the staff, premises and economic value test.

Activities satisfy the staff, premises and economic value test if they involve—

the use of employees, agents or contractors of the company in numbers, and with competence and authority, commensurate with the size and nature of the activities,

the use of premises and equipment commensurate with the size and nature of the activities, and

the addition of economic value by the company to the persons to whom the goods or services are provided commensurate with the size and nature of the activities.

This section applies for the purposes of section 3(1)(b) and (c).

Section 3A: Gains connected to avoidance or foreign activities etc

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