Cg14970 - deferred consideration: unascertainable: future payments when received - hmrc internal manual

CG14970 - DEFERRED CONSIDERATION: UNASCERTAINABLE: FUTURE PAYMENTS WHEN RECEIVED There will be an occasion of charge when each future payment is received. This should be treated as a

disposal or part-disposal of the right to receive the future payments. The acquisition cost of the right is the value of the right which has been brought into the original disposal

computation. Where losses accrue on disposals of certain rights on or after 10 April 2003 individuals and others within the charge to capital gains tax (but not companies within the charge

to corporation tax) may elect to set off the loss in earlier years, see CG15080+. Where a series of payments is received this will form a series of part-disposals. The value of the remaining

right at each date will need to be ascertained to use the part-disposal formula. These valuations can be obtained in the same way as the original valuation of the right, see CG14950. The

disposal (or part-disposal) of the right will not be eligible for any relief which was due (or claimed) on the disposal of the original asset. EXAMPLE 1 > A company sells business 

premises for consideration consisting of > cash plus a right to unascertainable future consideration. It > acquires replacement premises and claims roll-over relief under > 

TCGA92/S152, see CG60250+. > Roll-over relief will not be available to the company on the later > disposal of the right. The right is not a qualifying asset for > rollover relief 

purposes, see CG60410. Top of page EXAMPLE 2 > An individual disposes of a business for consideration which > includes a right to unascertainable future consideration. The > 

disposal qualifies for Business Asset Disposal Relief under > TCGA92/S169H, see CG63950+. > The later disposal of the right will not qualify for further relief. Where however, the

right was acquired on a sale of shares or debentures TCGA92/S138A may result in TCGA92/S135 operating so that the no disposal/same asset treatment of TCGA92/S127 applies, with the necessary

adaptations, to the exchange of the shares or debentures for the right. There is guidance on TCGA92/S138A at CG15020 and CG58000+ and on TCGA92/S135 at CG52500+. Previous page Next page

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