F1Part 1Capital gains tax and corporation tax on chargeable gains
Chapter 3Attribution of gains of non-UK resident close companies
Gains of non-UK resident companies not otherwise chargeable
3Gains attributed to UK resident individuals etc
1
This section applies if—
a
a chargeable gain accrues at any time to a non-UK resident close company,
b
the gain is connected to avoidance (see section 3A),
c
the gain is not connected to a foreign trade or other economically significant foreign activities (see section 3A), and
d
apart from this section, some or all of the gain would not be chargeable to corporation tax on the company.
2
So much of the gain as would not otherwise be so chargeable is apportioned among participators, or indirect participators, in the company—
a
who are resident in the United Kingdom at that time, or
b
who are trustees of a settlement and are not resident in the United Kingdom at that time.
3
The proportion of the amount of the gain to be apportioned to each person corresponds to the extent of the person's interest in the company as a participator or indirect participator.
4
The amount apportioned to each person is treated as a chargeable gain accruing to the person.
5
No apportionment of any part of a gain is made to an individual if—
a
the gain accrues in a tax year which, as respects the individual, is a split year, and
b
the gain accrues in the overseas part of the year.
6
No apportionment of any part of a gain is made to a person if the total amount that would, apart from this subsection, be apportioned to—
a
the person, and
b
persons connected to the person,
is 25% or less of the amount of the gain falling to be apportioned.
7
A person (“P”) is an “indirect participator” in a company (“A”) if—
a
another company (“B”) which is a non-UK resident close company is a participator in A, and
b
P is a participator in B or P is a participator in a third non-UK resident close company which is participator in B,
and so on through any number of non-UK resident close companies that are participators in other non-UK resident close companies.
8
P's interest as an indirect participator in A in the case of any gain is determined by—
a
apportioning the gain among the participators in A according to the extent of their respective interests as participators, and
b
then further apportioning the gain apportioned to B among the participators in B according to the extent of their respective interests as participators, and so on through other companies.
9
So far as it would go to reduce or extinguish chargeable gains accruing, as a result of this section, to a person in a chargeable period, this section applies to a loss accruing to the company on the disposal of an asset in that period as it would apply if there had been a gain.
10
But—
a
this only applies in relation to that person, and
b
this section does not otherwise apply in relation to losses accruing to the company.
11
In this section “a non-UK resident close company” means a company—
a
which is not resident in the United Kingdom, and
b
which would be a close company if it were resident in the United Kingdom.
Pt. 1 substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 2