Taxation of Chargeable Gains Act 1992 section 49

Contingent liabilities

Section 49 deals with how contingent liabilities are treated when computing chargeable gains on disposals of property, providing that they are initially ignored but may be accounted for later if they crystallise.

• When computing a chargeable gain, no deduction is initially allowed for contingent liabilities arising on the assignment of a lease where the assignor remains liable if the assignee defaults on lease obligations
• No deduction is allowed for contingent liabilities of a vendor or lessor of land in respect of covenants for quiet enjoyment or other obligations assumed in that capacity
• No deduction is allowed for contingent liabilities relating to warranties or representations made on the sale or lease of any property other than land
• If a contingent liability later becomes enforceable and is actually enforced, the taxpayer can make a claim for the gain to be recomputed, potentially resulting in a discharge or repayment of tax