Section 3 — Taxation of Chargeable Gains Act 1992: Gains attributed to UK resident individuals etc

Gains attributed to UK resident individuals etc 3 1 This section applies if—

a a chargeable gain accrues at any time to a non-UK resident close company, b the gain is connected to avoidance (see section 3A),

c the gain is not connected to a foreign trade or other economically significant foreign activities (see section 3A),

and d apart from this section, some or all of the gain would not be chargeable to corporation tax on the company.

2 So much of the gain as would not otherwise be so chargeable is apportioned among participators, or indirect participators, in the company—

a who are resident in the United Kingdom at that time, or b who are trustees of a settlement and are not resident in the United Kingdom at that time.

3 The proportion of the amount of the gain to be apportioned to each person corresponds to the extent of the person's interest in the company as a participator or indirect participator.

4 The amount apportioned to each person is treated as a chargeable gain accruing to the person.

5 No apportionment of any part of a gain is made to an individual if—

a the gain accrues in a tax year which, as respects the individual, is a split year, and b the gain accrues in the overseas part of the year.

6 No apportionment of any part of a gain is made to a person if the total amount that would, apart from this subsection, be apportioned to—

a the person, and b persons connected to the person, is 25% or less of the amount of the gain falling to be apportioned.

7 A person (“P”) is an “indirect participator” in a company (“A”) if—

a another company (“B”) which is a non-UK resident close company is a participator in A, and b P is a participator in B or P is a participator in a third non-UK resident close company which is participator in B, and so on through any number of non-UK resident close companies that are participators in other non-UK resident close companies.

8 P's interest as an indirect participator in A in the case of any gain is determined by—

a apportioning the gain among the participators in A according to the extent of their respective interests as participators, and b then further apportioning the gain apportioned to B among the participators in B according to the extent of their respective interests as participators, and so on through other companies.

9 So far as it would go to reduce or extinguish chargeable gains accruing, as a result of this section, to a person in a chargeable period, this section applies to a loss accruing to the company on the disposal of an asset in that period as it would apply if there had been a gain.

10 But—

a this only applies in relation to that person, and b this section does not otherwise apply in relation to losses accruing to the company.

11 In this section “ a non-UK resident close company ” means a company—

a which is not resident in the United Kingdom, and b which would be a close company if it were resident in the United Kingdom.