D3. Modification and variation of assets/rights

- Capital sum as a deemed disposal

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General position

- TCGA s.22 treats capital sums derived from assets as giving rise to a deemed disposal.

- "A capital sum received by a person because the terms of a contract to which he was a party have been modified, varied, waived, assigned, terminated, rescinded, relinquished or surrendered will normally fall to be treated as having been derived from the recipient’s contractual rights." (CG13000).

- If the modification/variation was done without T's consent and T takes legal action, the compensation may derive from the right of action. 

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Capital sum

- Means any money or money's worth not excluded from the consideration taken into account in computing gains (s.22(3)).

 

Quantum of consideration

- Logically the market value of the capital sum received.

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Legislation: TCGA 1992, s.22.

Cases: 

HMRC manuals: CG13000 - Capital sums derived from assets: s22(1) TCGA92: contractual rights; 

Commentary: 

See also:

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