Section 268B — Taxation of Chargeable Gains Act 1992: Compensation for deprivation of foreign assets

Compensation for deprivation of foreign assets 268B 1 A gain is not a chargeable gain if—

a it accrues to a person on receipt of a capital sum paid by way of compensation for the deprivation of a foreign asset, b no legal redress was available when the deprivation occurred, and c the sum is paid as the result of a relevant compensation award.

2 A relevant compensation award is an award or distribution made—

a under—

i an Order in Council made under the Foreign Compensation Act 1950, or ii arrangements established by the government of a territory outside the United Kingdom that are equivalent in effect to such an Order, b as a result of a recommendation of—

i the Spoliation Advisory Panel, or ii a body outside the United Kingdom whose purposes and functions are equivalent to those of the Panel, or c in settlement of a legal claim to the effect that the deprivation was unlawful or in accordance with an order to that effect made by a court, tribunal or other competent authority with jurisdiction to decide such a claim.

3 Reference in this section to the payment of a capital sum by way of compensation for the deprivation of a foreign asset includes—

a payment as a result of the abandonment or extinguishment of rights in respect of the deprivation;

b return of the asset itself.

4 In the case of a gain accruing to a person other than the original owner—

a subsection (1) does not apply if consideration had been given at any time (whether by that person or someone else) for the right to receive the compensation, but b consideration given on an acquisition falling within section 58(1) or 171(1) is to be ignored for these purposes.

5 If the capital sum is paid (or the foreign asset returned) to a person to whom an allowable loss has accrued as a result of—

a the deprivation of the foreign asset, or b the abandonment or extinguishment of rights in respect of the deprivation, subsection (1) applies only to so much of any gain as exceeds that loss.

6 For a person to obtain relief under this section, the person must make a claim.

7 If the capital sum is paid by means of the transfer of an asset (or the foreign asset is returned), that asset is to be treated for the purposes of computing a gain or a loss on its subsequent disposal as if it were acquired for a consideration equal to its market value at the time of the transfer.

8 In this section— “capital sum” means money or money’s worth; “deprivation”, in relation to a foreign asset, includes deprivation resulting from— the seizure, confiscation, forfeiture, destruction or expropriation of the asset, the disposal of the asset by a sale under duress for less than market value; “foreign asset” means an asset which was situated outside the United Kingdom at the time of the deprivation; “legal redress”, in relation to the deprivation of a foreign asset, means a right to recover the asset or to receive compensation for the deprivation; “original owner” means the person who owned the foreign asset at the time of the deprivation; “Spoliation Advisory Panel” includes any successor to that Panel.

9 This section does not apply in relation to a gain to which section 268A applies.