CGT 43 Value Shifting Flashcards
Where taxpayers manipulate assets (usually shares), so that value passes from one holding into another….
the value shifting provisions in TCGA 1992, s.29 should be considered
‘Value shifting’ is most commonly seen in …
transactions between connected persons (for
example, transfers of shares from parents to children).
TCGA 1992, s.29 operates where a person who has control of a company exercises their control so that….
value passes out of their own shares in the company into other shares in the company. Such a transfer is treated as a part disposal of the shares by the person with the control.
The aim of TCGA 1992, s.29 is to…..
tax the amount of value passing INTO the holdings of the transferee (which is often but not always the same as the value passing out of the shares owned by the transferor).
The value shifting rules also apply if ….
a person who controls a company exercises that control so that value passes out of rights in the company exercisable by that person
If a capital loss arises from a deemed disposal under the ‘value shifting’ rules…..
that loss is not an allowable loss.
Business asset disposal relief?
Where the relevant conditions are satisfied, business asset disposal relief or business asset gift relief may be claimed against any gains arising to the transferor.
Rights offer at less than market price?
Controlling shareholders may arrange that the company will make a rights offer at less than market value, with the intention that they will not take up their entitlements. This shifts value from the shares of controlling shareholders into the shares of others and the value shifting rules in TCGA 1992, s.29 would then apply.
