Finance Act, 1990

Deduction of offshore income gain in determining capital gain.

69.—(1) The provisions of this section shall apply where a disposal (being a disposal to which this Chapter applies) gives rise to an offshore income gain and, if that disposal also constitutes the disposal of the interest concerned for the purposes of the Principal Act, then that disposal is in this section referred to as “the disposal for the purposes of the Principal Act”.

(2) So far as relates to an offshore income gain which arises on a material disposal (within the meaning of Part I of the Sixth Schedule ) subsections (3) and (4) shall have effect in relation to the disposal for the purposes of the Principal Act in substitution for paragraph 2 (1) of Schedule 1 to that Act.

(3) Subject to the following provisions of this section, in the computation in accordance with Part I of Schedule 1 to the Principal Act (subject to the further provisions in Schedules 2 and 3 to that Act) of any gain accruing on the disposal for the purposes of the Principal Act, a sum equal to the offshore income gain shall be deducted from the sum which would otherwise constitute the amount or value of the consideration for the disposal.

(4) Where the disposal for the purposes of the Principal Act is of such a nature that, by virtue of paragraph 6 of Schedule 1 to that Act, an apportionment falls to be made of certain expenditure, then no deduction shall be made by virtue of subsection (3) in determining, for the purposes of the apportionment in subparagraph (2) of the said paragraph 6, the amount or value of the consideration for the disposal.

(5) If the disposal for the purposes of the Principal Act forms part of a transfer to which paragraph 6 of Schedule 2 to that Act applies then, for the purposes of subparagraph (4) of that paragraph, the value of the whole of the consideration received by the transferor in exchange for the business shall be taken to be what it would be if the value of the consideration (other than shares so received by the transferor) were reduced by a sum equal to the offshore income gain.

(6) Where the disposal to which this Chapter applies constitutes such a disposal by virtue of section 63 (6) or 64 (5), then the Principal Act shall have effect as if an amount equal to the offshore income gain to which the disposal gives rise were given (by the person making the exchange concerned) as consideration for the new holding, within the meaning of paragraph 2 (1) of Schedule 2 to that Act.

(7) In any case where—

(a) a disposal to which this Chapter applies by virtue of subsection (3) of section 64 is made otherwise than to the offshore fund concerned or to the persons referred to in subsection (2) (b) of that section, and

(b) subsequently, a distribution which is referable to the asset disposed of is paid either to the person who made the disposal or to a person connected with him, and

(c) the disposal gives rise (in accordance with Part II of the Sixth Schedule ) to an offshore income gain,

then, for the purposes of the Tax Acts, the amount of the first distribution falling within paragraph (b) shall be taken to be reduced or, as the case may be, extinguished by deducting therefrom an amount equal to the offshore income gain referred to in paragraph (c) and, if that amount exceeds the amount of that first distribution, the balance shall be set against the second and, where necessary, any subsequent distribution falling within paragraph (b), until the balance is exhausted.

(8) Section 157 of the Corporation Tax Act, 1976 , shall apply for the purposes of subsection (7) (b).