Taxation of Chargeable Gains Act 1992 Schedule 7AD paragraph 5

Deemed disposal of single asset in case of distribution

Paragraph 5 sets out when an insurance company is treated as having made a disposal of its "single asset" interest in a venture capital investment partnership's relevant assets, triggered by distributions from the partnership.

• A deemed disposal of the single asset occurs each time the company receives a distribution from the partnership that is not wholly made up of income or proceeds from the sale or redemption of non-relevant assets.
• The disposal consideration equals the distribution amount, or the portion that does not consist of income or proceeds from non-relevant asset sales or redemptions.
• If the partnership sells relevant assets that would give rise to a chargeable gain or allowable loss if held by the company alone, and no distribution of proceeds is made within twelve months, the company is deemed to receive its share as a distribution at the later of the end of the next partnership accounting period or six months after the disposal date.
• Once a deemed distribution is triggered under the twelve-month rule, any subsequent actual distribution of those same proceeds is ignored.

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