The Enactment of Extra-Statutory Concessions Order 2010

Compensation for deprivation of foreign assets

9.—(1) In the Taxation of Chargeable Gains Act 1992, after section 268A(1) insert—

“268B    Compensation for deprivation of foreign assets

(1) A gain is not a chargeable gain if—

(a) it accrues to a person on receipt of a capital sum paid by way of compensation for the deprivation of a foreign asset,

(b) no legal redress was available when the deprivation occurred, and

(c) the sum is paid as the result of a relevant compensation award.

(2) A relevant compensation award is an award or distribution made—

(a) under—

(i) an Order in Council made under the Foreign Compensation Act 1950(2), or

(ii) arrangements established by the government of a territory outside the United Kingdom that are equivalent in effect to such an Order,

(b) as a result of a recommendation of—

(i) the Spoliation Advisory Panel, or

(ii) a body outside the United Kingdom whose purposes and functions are equivalent to those of the Panel, or

(c) in settlement of a legal claim to the effect that the deprivation was unlawful or in accordance with an order to that effect made by a court, tribunal or other competent authority with jurisdiction to decide such a claim.

(3) Reference in this section to the payment of a capital sum by way of compensation for the deprivation of a foreign asset includes—

(a) payment as a result of the abandonment or extinguishment of rights in respect of the deprivation;

(b) return of the asset itself.

(4) In the case of a gain accruing to a person other than the original owner—

(a) subsection (1) does not apply if consideration had been given at any time (whether by that person or someone else) for the right to receive the compensation, but

(b) consideration given on an acquisition falling within section 58(1) or 171(1)(3) is to be ignored for these purposes.

(5) If the capital sum is paid (or the foreign asset returned) to a person to whom an allowable loss has accrued as a result of—

(a) the deprivation of the foreign asset, or

(b) the abandonment or extinguishment of rights in respect of the deprivation,

subsection (1) applies only to so much of any gain as exceeds that loss.

(6) For a person to obtain relief under this section, the person must make a claim.

(7) If the capital sum is paid by means of the transfer of an asset (or the foreign asset is returned), that asset is to be treated for the purposes of computing a gain or a loss on its subsequent disposal as if it were acquired for a consideration equal to its market value at the time of the transfer.

(8) In this section—

“capital sum” means money or money’s worth;

“deprivation”, in relation to a foreign asset, includes deprivation resulting from—

(a)

the seizure, confiscation, forfeiture, destruction or expropriation of the asset,

(b)

the disposal of the asset by a sale under duress for less than market value;

“foreign asset” means an asset which was situated outside the United Kingdom at the time of the deprivation;

“legal redress”, in relation to the deprivation of a foreign asset, means a right to recover the asset or to receive compensation for the deprivation;

“original owner” means the person who owned the foreign asset at the time of the deprivation;

“Spoliation Advisory Panel” includes any successor to that Panel.

(9) This section does not apply in relation to a gain to which section 268A applies.”.

(2) The amendment made by paragraph (1) has effect—

(a) for corporation tax purposes, in relation to capital sums received on or after 1st April 2010, and

(b) for capital gains tax purposes, in relation to capital sums received on or after 6th April 2010.

(1)

Section 268A was inserted by section 64(4) of the Finance Act 2006 (c. 25).

(2)

1950 c. 12 (14 Geo 6); amended by Part 2 of the Schedule to the Statute Law (Repeals) Act 1974 (c. 22), paragraph 12(2) of Schedule 2 to the Statute Law (Repeals) Act 1989 (c. 43), paragraph 25 of Schedule 6 to the Judicial Pensions and Retirement Act 1993 (c. 8) and the Foreign Compensation (Amendment) Act 1993 (c. 16).

(3)

Section 171(1) was substituted by paragraph 2(2) of Schedule 29 to the Finance Act 2000 (c. 17).