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Mystery of the Underwood

SIMON MCKIE examines the nature of a disposal for capital gains tax purposes in light of the decision in Underwood v CRC

KEY POINTS

  • No definition of a disposal exists in the legislation
  • Does the transfer of beneficial ownership constitute a disposal?
  • The treatment of transfers of assets into a trust
  • The nature of a promissory contract
  • How does Jerome v Kelly help?

Capital gains tax was introduced 43 years ago. It is and has been since its introduction chargeable on capital gains 'accruing to a person on the disposal of assets'.

One might have thought therefore that the nature of a disposal for capital gains tax would be absolutely clear. In fact there is no general definition of a disposal to be found in the legislation although particular provisions extend the meaning of the word to various transactions and other situations which would or might not be disposals within...

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