Finance Act 1989

127 Non-residents: deemed disposals.U.K.

(1)Where an asset ceases by virtue of becoming situated outside the UnitedKingdom to be a chargeable asset in relation to a person, he shall be deemedfor all purposes of the M1Capital Gains Tax Act 1979—

(a)to have disposed of the asset immediately before the time when it becamesituated outside the United Kingdom, and

(b)immediately to have reacquired it,

at its market value at that time.

(2)Subsection (1) above does not apply—

(a)where the asset becomes situated outside the United Kingdomcontemporaneously with the person there mentioned ceasing to carry on a tradein the United Kingdom through a branch or agency, or

(b)where the asset is an exploration or exploitation asset.

(3)Where an asset ceases to be a chargeable asset in relation to a person byvirtue of his ceasing to carry on a trade in the United Kingdom through abranch or agency, he shall be deemed for all purposes of the Capital Gains TaxAct 1979—

(a)to have disposed of the asset immediately before the time when he ceasedto carry on the trade in the United Kingdom through a branch or agency, and

(b)immediately to have reacquired it,

at its market value at that time.

[F1(3A)Subsection (3) above shall not apply to an asset by reason of a transferof the whole or part of the long term business of an insurance company toanother company if section 267 of the Taxes Act 1970 has effect in relationto the asset by virtue of section 267A of that Act.]

(4)Subsection (3) above does not apply to an asset which is a chargeableasset in relation to the person there mentioned at any time after he ceasesto carry on the trade in the United Kingdom through a branch or agency andbefore the end of the chargeable period in which he does so.

(5)In this section—

• “exploration or exploitation asset” means an asset used inconnection with exploration or exploitation activities carried on in theUnited Kingdom or a designated area, and

• “designated area” and “exploration or exploitationactivities” have the same meanings as in section 38 of the M2Finance Act 1973.

(6)For the purposes of this section an asset is at any time a chargeableasset in relation to a person if, were it to be disposed of at that time, anychargeable gains accruing to him on the disposal—

(a)would be gains in respect of which he would be chargeable to capital gainstax under section 12(1) of the Capital Gains Tax Act 1979 (non-resident withUnited Kingdom branch or agency), or

(b)would form part of his chargeable profits for corporation tax purposes byvirtue of section 11(2)(b) of the Taxes Act 1988 (non-resident companies).

(7)Subsection (1) above shall apply where an asset ceases to be situated inthe United Kingdom on or after 14th March 1989.

(8)Subsection (3) above shall apply where a person ceases to carry on a tradein the United Kingdom through a branch or agency on or after 14th March 1989.

(9)This section shall apply as if references to a trade included referencesto a profession or vocation.