New queries, issue 4356

Deferral and disposal

I would be very grateful if anyone could give me a heads-up on the rules relating to deferred consideration.

My understanding was that if someone were to sell their shares in their company to a third party over a period of several years they would only receive one capital gains tax annual exemption and the contract would be deemed to take place at the time of the original contract.

However if other factors come into play – for example if the price to be paid for the future tranches depends on future performance or values – then each transfer would be treated as a separate disposal.

TCGA 1992 s 28 seems to set out these basic rules but I then noted that the commentary in Simon’s Taxes states:

‘For capital gains tax to apply there also needs to be...