D5. Fruition of a right

- 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.

- Where a right produces a capital sum, e.g. a right to deferred consideration, that is a capital sum derived from the asset.

- HMRC give the example of a Marren v. Ingles right:

- "The court concluded that the right to receive future unascertainable payments was a ‘chose in action’. In those circumstances the right was incorporeal property and an asset for CG purposes, which could be separated out from the bundle of rights in the contract. When the future amounts were ascertained and received they fell to be treated as capital sums derived from a chose in action within the charge under s22 TCGA92." (CG13000).

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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: Marren (Inspector of Taxes) v Ingles (1980) 54 TC 76;

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

Commentary: 

See also:

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