Taxation of Chargeable Gains Act 1992 Schedule 4A paragraph 13

Cases where there is a period between the beginning of the disposal and its effective completion

Paragraph 13 of Schedule 4A addresses situations where the disposal of an interest in settled property does not happen instantaneously but instead spans a period from its beginning to its effective completion, and sets out anti-avoidance rules to prevent manipulation of timing and asset values during that gap.

• Where the beginning and effective completion of a disposal fall in different tax years, the deemed disposal is treated as taking place in the year of effective completion, and the residence and settlor-interest conditions are tested across the entire span of years involved.
• The "beginning" of the disposal is when an option is granted (for option-based disposals) or when the contract is entered into (in all other cases), while "effective completion" is the point at which the acquirer becomes unconditionally entitled to the full subject matter.
• If the trust's underlying assets or their values change during the gap period, each asset held at any point during that period is treated as comprised in the settlement, and its market value is taken at the highest level reached during the period.
• The anti-avoidance valuation rules do not apply to any asset that the trustees dispose of at arm's length during the gap period and do not reacquire.