Section 236O — Taxation of Chargeable Gains Act 1992: No section 236H relief if disqualifying event in next four tax years

No section 236H relief if disqualifying event in next four tax years 236O 1 This section applies where—

a a disposal is made in circumstances where paragraphs (a) and (b) of section 236H(1) are satisfied, and b one or more disqualifying events occur in relation to the disposal in any of the first four tax years following the tax year in which the disposal occurs.

2 A “disqualifying event” occurs in relation to the disposal if and when—

za the trustees of the settlement cease to be resident in the United Kingdom, a C ceases to meet the trading requirement, b the settlement ceases to meet the all-employee benefit requirement, ba the settlement ceases to meet the trustee independence requirement, c the settlement ceases to meet the controlling interest requirement, d the participator fraction exceeds 2/5, or e the trustees act in a way which the trusts, as required by the all-employee benefit requirement, do not permit. 2A Where—

a a disqualifying event falling within subsection (2)(za) occurs (trustees cease to be resident in the United Kingdom),

b the event only occurs as a result of the death of a trustee of the settlement, and c within the period of 6 months beginning with the death of the trustee, the trustees become resident in the United Kingdom, the disqualifying event is to be ignored. 2B Where—

a a disqualifying event falling within subsection (2)(ba) occurs (trustee independence requirement ceases to be met),

b the event only occurs as a result of—

i the death of a trustee of the settlement, or ii the death of a director of a company that is a trustee of the settlement, and c within the period of 6 months beginning with that death, the settlement meets the trustee independence requirement, the disqualifying event is to be ignored.

3 No claim for relief under section 236H may be made in respect of the disposal on or after the day on which the disqualifying event (or, if more than one, the first of them) occurs.

4 Any claim for relief under section 236H made in respect of the disposal before that day is revoked, and the chargeable gains and allowable losses of any person for any chargeable period are to be calculated as if that claim had never been made.

5 Such adjustments must be made in relation to any person, whether by the making of assessments or otherwise, as are required to give effect to subsection (4) (regardless of any limitation on the time within which any adjustment may be made).

6 Section 236H(5) (restrictions on application of section 236L) applies for the purposes of subsection (2)(b).

7 Section 236N(4) applies for the purposes of subsection (2)(d) as it applies in relation to section 236N(2)(b) and (3).