CG73733 - Non-Resident Capital Gains Tax (NRCGT) - Disposals on or after 6 April 2015 to 5 April 2019: The Charge to Non-Resident CGT, and the exemptions: Anti-Avoidance provision

The legislation provides a safeguard against abuse. TCGA92/S14H* sets out an anti-avoidance provision, designed to prevent a tax charge under TCGA92/S14D* being avoided by artificial arrangements. It applies where arrangements are entered into, and the main purpose, or one of the main purposes, of any party entering into them is to avoid CGT being charged under S14D* on a disposal of UK residential property.

It is targeted at cases where a person who would otherwise be liable to non-resident CGT manipulates the rules in S14F* (perhaps with the assistance of others such as a company or its shareholders) to obtain exemption in relation to either subsection (2) (diversely-held companies), or subsection (3) (widely-marketed schemes).

Where the purpose of the arrangements is to ensure that non-resident CGT is not chargeable, by contriving to make a company pass the test of not being closely held at the time of the disposal of an interest in UK residential property, the effect of TCGA92/S14H* is that the arrangements are ignored in determining whether the company is an eligible person by virtue of subsection (2) or (3). The company will be regarded as closely held, and any gain will therefore be chargeable to non-resident CGT. “Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

*These sections were re-written for disposals from 6 April 2019 see CG10150