Income Tax (Trading and Other Income) Act 2005

561 The return from one or more disposals

(1) In this Chapter, references to the return from one or more disposals are references to the return on investment represented by—

(a) the total net profits and gains arising from the disposal or disposals, or

(b) all but an insignificant part of those net profits and gains.

(2) For the purposes of subsection (1), if there are two or more disposals, it is to be assumed that profits and gains realised, and losses made, by persons who are associated with each other are all realised or made by the same person.

(3) For the purposes of subsection (2), persons are associated with each other in relation to any two or more disposals if conditions A to C are met.

(4) Condition A is that the disposals are made in pursuance of the same scheme or arrangements.

(5) Condition B is that each of the persons shares or is to share in the net return represented by the total of all the profits, gains and losses realised or made on the disposals.

(6) Condition C is that the extent of the persons' shares is determined for the purposes of, or in accordance with, the scheme or arrangements.

(7) For the purposes of this section—

(a) “scheme or arrangements” includes understandings of any kind, and

(b) it does not matter whether any scheme or arrangements are legally enforceable.