Taxation of Chargeable Gains Act 1992 section 31

Deemed disposals of UK land by companies previously owned by fund

Section 31 deals with what happens when a qualifying fund or company that has elected for the transparency exemption disposes of all its interests in a UK property rich company that was covered by that election, triggering a deemed disposal and reacquisition of UK land assets by that company.

• When a qualifying fund or company (Q) that has made a transparency election sells all its rights and interests in a UK property rich company (C) covered by that election, a deemed disposal of UK land assets is triggered within C.
• C is treated as having sold and immediately reacquired the appropriate proportion of every qualifying asset (whose disposal would amount to a direct or indirect disposal of UK land) at market value, immediately before the disposal of interests in C.
• The "appropriate proportion" is calculated by reference to the portion of gain that would be attributed under the exemption rules, assuming C sold the asset for a gain of £100.
• An asset only qualifies if it has been held throughout the one-year period ending on the day of disposal by C, another company covered by the election, or by Q itself.