Part IIGeneral Provisions relating to computation of gains and acquisitions and disposals of assets

Chapter IIIComputation of gains: General provisions

Re-basing to 1982, and assets held on 6th April 1965

35Assets held on 31st March 1982 (including assets held on 6th April 1965)

(1)This section applies to a disposal of an asset which was held on 31st March 1982 by the person making the disposal.

(2)Subject to the following provisions of this section, in computing for the purpose of this Act the gain or loss accruing on the disposal it shall be assumed that the asset was on 31st March 1982 sold by the person making the disposal, and immediately reacquired by him, at its market value on that date.

(3)Subject to subsection (5) below, subsection (2) above shall not apply to a disposal—

(a)where a gain would accrue on the disposal to the person making the disposal if that subsection did apply, and either a smaller gain or a loss would so accrue if it did not,

(b)where a loss would so accrue if that subsection did apply, and either a smaller loss or a gain would accrue if it did not,

(c)where, either on the facts of the case or by virtue of Schedule 2, neither a gain nor a loss would accrue if that subsection did not apply, or

(d)where neither a gain nor a loss would accrue by virtue of any of—

(i)sections 58, 73, 139, 171, 172, 215, 216, 218 to 221, 257(3), 258(4), 264 and 267(2) of this Act;

(ii)section 148 of the 1979 Act;

(iii)section 148 of the [1982 c. 39.] Finance Act 1982;

(iv)paragraph 2 of Schedule 2 to the [1985 c. 50.] Trustee Savings Banks Act 1985;

(v)section 130(3) of the [1985 c. 67.] Transport Act 1985;

(vi)section 486(8) of the Taxes Act; and

(vii)paragraph 2(1) of Schedule 12 to the [1990 c. 29.] Finance Act 1990.

(4)Where in the case of a disposal of an asset—

(a)the effect of subsection (2) above would be to substitute a loss for a gain or a gain for a loss, but

(b)the application of subsection (2) is excluded by subsection (3),

it shall be assumed in relation to the disposal that the asset was acquired by the person making the disposal for a consideration such that, on the disposal, neither a gain nor a loss accrues to him.

(5)If a person so elects, disposals made by him (including any made by him before the election) shall fall outside subsection (3) above (so that subsection (2) above is not excluded by that subsection).

(6)An election by a person under subsection (5) above shall be irrevocable and shall be made by notice to the inspector at any time before 6th April 1990 or at any time during the period beginning with the day of the first relevant disposal and ending—

(a)2 years after the end of the year of assessment or accounting period in which the disposal is made, or

(b)at such later time as the Board may allow;

and “the first relevant disposal” means the first disposal to which this section applies which is made by the person making the election.

(7)An election made by a person under subsection (5) above in one capacity does not cover disposals made by him in another capacity.

(8)All such adjustments shall be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under subsection (5) above.

(9)Schedule 2 shall have effect in relation to disposals of assets owned on 6th April 1965 in cases where neither subsection (2) nor subsection (4) above applies.

(10)Schedule 3, which contains provisions supplementary to subsections (1) to (8) above, shall have effect.

36Deferred charges on gains before 31st March 1982

Schedule 4, which provides for the reduction of a deferred charge to tax where the charge is wholly or partly attributable to an increase in the value of an asset before 31st March 1982, shall have effect.