CG20500 - Insolvency and bankruptcy

S66(1) provides that a trustee or assignee in bankruptcy or a person who holds assets under a deed of arrangement is to be treated as a nominee, see CG34300+, of the bankrupt or debtor. This means that you disregard for Capital Gains Tax (“CGT”) purposes the vesting of assets in the trustee or assignee or the re-transfer of assets to the debtor. 

Under s66(4), property held by a trustee in bankruptcy or under a deed of arrangement is not to be treated as 'settled property' within s68. Chargeable gains accruing on disposals of the property are assessable on, and the tax (computed by reference to the bankrupt's or debtor's circumstances) is recoverable from the trustee or assignee. This follows the decision in re McMeekin, a bankrupt 48TC725. The trustee or assignee should include any liability to CGT in a personal return and not a trustee's return. 

 

Death of bankrupt 

Where the bankrupt or debtor dies while any of his or her assets are vested in a trustee or other person, s66(1) ceases to apply after his or her death. For the purposes of s62(1), see CG30300+, the assets should be deemed to be acquired by the trustee or other person as if he or she were a personal representative (s66(2)). 

Similarly, where the assets of a deceased person are vested in a trustee in bankruptcy after the death, for example following a successful petition of creditors, the trustee should be treated as the personal representative of the deceased (s66(3)) and as if the property devolved on the trustee at the death.