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Readers’ forum: Was capital gains tax adjustment overlooked?

27 November 2023
Issue: 4915 / Categories: Forum & Feedback , Capital Gains
TCGA 1992, s 125

When looking for something else I stumbled on TCGA 1992 s 125 which I must confess I had not been aware of before.

This seems to suggest that I should be reducing the base cost of clients’ shares every time there is a non-arm’s length transaction by a close company.

My clients and I am sure that they are not unique in this regard do transfer assets to shareholders or employees for no consideration or at undervalue from time to time. I have always computed a capital gain on the disposal by the company and taxed the individual on the receipt but should I also have been reducing the base costs of the shares in the company? In many cases the base cost is only nominal in the first place.

In all my years of practice I’ve never seen this section being applied. Have I...

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