Section 809VK — Income Tax Act 2007: Retention of funds to meet CGT liabilities

Retention of funds to meet CGT liabilities 809VK 1 This section applies if—

a there is a disposal of all or part of the holding, b the disposal counts as a potentially chargeable event or is part of the appropriate mitigation steps taken in consequence of a potentially chargeable event, c a chargeable gain (but not a loss) accrues to P on the disposal, d P is chargeable to capital gains tax (but not corporation tax) in respect of that gain, and e the actual disposal proceeds are less than Y.

2 The difference between the actual disposal proceeds and Y is referred to in this section as “ the shortfall ”. 3 “ The actual disposal proceeds ” means the disposal proceeds but disregarding section 809Z8(4). 4 “Y” is the sum of—

a the amount (if any) that would, but for this section, be required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b),

and b the amount found by applying the highest potential CGT rate to the amount (computed in accordance with TCGA 1992) of the chargeable gain accruing to P on the disposal.

5 The highest potential CGT rate is the highest rate specified in section 1H of TCGA 1992 (regardless of the type of the chargeable gain or, if P is an individual, the rate of income tax at which P's income is chargeable).

6 If this section applies, the amount that is required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b) is reduced by the permitted amount. 7 “The permitted amount” is so much of the shortfall as is used, within the grace period allowed for taking the disposal proceeds offshore or re-investing them, to make a deposit in respect of which a certificate of tax deposit is issued to P under section 12 of the National Loans Act 1968.

8 A reduction may not be made under subsection (6) unless—

a when details of the deposit are confirmed to Her Majesty's Revenue and Customs, the confirmation letter states that this section is intended to apply to the deposit, and b the amount of the deposit is no greater than the shortfall.