Taxation of Chargeable Gains Act 1992 section 47B

Disposals made by persons after leaving cash basis

Section 47B deals with how capital gains tax applies when a business that previously used the cash basis of accounting disposes of an asset after it has left the cash basis.

• When a business leaves the cash basis and disposes of an asset previously used in that basis, special rules adjust how the gain or loss is calculated
• Two conditions must be met: the cost of the asset must have been deducted as an expense under the cash basis, and the business must no longer be using the cash basis at the time of disposal
• The normal rule that prevents expenditure already relieved against income from being deducted in a capital gains calculation is disapplied, but instead the asset is treated as though capital allowances had been claimed on it
• Wasting asset exemptions and related provisions are also adjusted so they apply as if the business had never been on the cash basis when the expenditure was incurred