What does Schedule 8A paragraph 2 of TCGA 1992 do?

Schedule 8A paragraph 2 confirms the consequences when section 37 of TCGA 1992 operates to exclude the whole consideration from a disposal. Where the entire consideration is excluded, no chargeable gain or allowable loss arises, and the disposal is effectively neutralised for capital gains tax purposes under United Kingdom law.

What is section 37 of TCGA 1992 and how does it interact with Schedule 8A?

Section 37 is an anti-avoidance provision that reduces or excludes consideration for a disposal where value passing is not reflected in the actual transaction outcome. When section 37 excludes the whole consideration, Schedule 8A paragraph 2 confirms no chargeable gain or allowable loss arises on the disposal.

When was Schedule 8A paragraph 2 introduced and amended?

This provision was originally enacted as part of Schedule 9 to Finance Act 2010. It was subsequently amended by section 35(5) of Finance Act 2012 to refine its application. Accountants should note its relevance where transactions involve arrangements that artificially inflate or redirect consideration.

What happens when HMRC excludes the whole consideration under section 37?

When HMRC applies section 37 to exclude the entire consideration from a disposal, there is no amount remaining on which to calculate a chargeable gain or allowable loss. The transaction is effectively disregarded for capital gains tax purposes, as confirmed by Schedule 8A paragraph 2 of TCGA 1992.

Taxation of Chargeable Gains Act 1992 Schedule 8A paragraph 2

Section 37 operates to exclude the whole consideration

Schedule 8A paragraph 2 addresses what happens when section 37 of TCGA 1992 applies to exclude the entire consideration from a disposal, effectively removing the transaction from the scope of chargeable gains.

Where section 37 operates to exclude the whole of the consideration for a disposal, the disposal falls outside the charge to capital gains tax entirely.
Section 37 deals with situations where consideration for a disposal is not reflected in the state of affairs at the completion of the transaction, typically where value has been diverted or is otherwise excluded.
When the whole consideration is excluded under section 37, no chargeable gain or allowable loss arises on that disposal.
This provision was introduced by Finance Act 2010 and subsequently amended by Finance Act 2012 to refine its application.

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member