Section 137 — Taxation of Chargeable Gains Act 1992: Restriction on application of sections 135 and 136 : anti-avoidance .

Restriction on application of sections 135 and 136 : anti-avoidance . 137 1 This section applies in respect of arrangements relating to an exchange or scheme of reconstruction as regards which section 135 or 136 applies if the main purpose, or one of the main purposes, of the arrangements is to reduce or avoid liability to capital gains tax or corporation tax. 1A Any such reduction or avoidance that would (in the absence of this section) arise from such arrangements is to be counteracted by the making of such adjustments as are just and reasonable (in light of the reduction or avoidance). 1B This includes, in an appropriate case, disapplying section 135 or 136 insofar as is required to counteract the reduction or avoidance. 1C Any adjustments required to be made under this section (whether or not by an officer of Revenue and Customs) may be made by way of—

a an assessment, or b the modification of an assessment. 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 If any tax assessed on a person (the chargeable person) by virtue of this section is not paid within 6 months from the date when it is payable, any other person who—

a holds all or any part of the shares or debentures that were issued to the chargeable person as part of the exchange or scheme of reconstruction , and b has acquired them without there having been, since their acquisition by the chargeable person, any disposal of them not falling within section 58(1) or 171, may, at any time within 2 years from the time when the tax became payable, be assessed and charged (in the name of the chargeable person) to all or, as the case may be, a corresponding part of the unpaid tax; and a person paying any amount of tax under this subsection shall be entitled to recover a sum of that amount from the chargeable person.

5 With respect to chargeable gains accruing in chargeable periods ending after such day as the Treasury may by order appoint, in subsection (4) above—

a for the words “the date when it is payable" there shall be substituted “ the date determined under subsection (4A) below ” ;

b for the words “the time when the tax became payable" there shall be substituted “ that date ” ;

and c for the words “a sum" onwards there shall be substituted “ from the chargeable person a sum equal to that amount together with any interest paid by him under section 87A of the Management Act on that amount ” ; and after that subsection there shall be inserted— 4A The date referred to in subsection (4) above is whichever is the later of—

a the date when the tax becomes due and payable by the chargeable person;

and b the date when the assessment was made on the chargeable person.

6 In this section references to shares or debentures include references to any interests or options to which this Chapter applies by virtue of section 135(5), 136(5) or 147.

7 In this section, “ arrangements ” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).