伊人直播

This page is purely for illustrative purposes as the scheme closed on 23 November 2017.

When the scheme was in force the maximum tax deposit that could have been made after a partial disposal is the difference between the actual disposal proceeds and, if higher, 鈥渁mount Y鈥�.

Amount Y is the sum of:

• the amount required to be taken offshore or re-invested to satisfy the appropriate mitigation steps [see RDRM34440]

and

• the chargeable gain accruing on the disposal charged at the highest potential Capital Gains Tax rate applying for the year in which the gain accrues (s809VK(4) ITA2007).

If an individual made a tax deposit from the disposal proceeds of an amount greater than this:

• the amount to be taken offshore or re-invested could only be reduced by the calculated maximum amount
• any excess deposited, above the calculated maximum, would have been regarded as a remittance.

If the actual disposal proceeds exceed 鈥榊鈥�, the CTD scheme could not have been used by the taxpayer to reduce the amount of the disposal proceeds to be taken offshore or re-invested in order to satisfy the appropriate mitigation steps.

When making a tax deposit the taxpayer was required to send HMRC a confirmation letter. In addition to the normal information required, the investor must have included a statement advising that 鈥業TA07/s809VK Retention of funds to meet Capital Gains Tax liabilities鈥� is intended to apply to the tax deposit. (s809VK(8) ITA2007)

Example 1

Charan pays tax on the remittance basis. In 2012-2013 he made a qualifying investment of 拢1 million in an engineering company and was issued with 20,000 shares. He subsequently makes a claim for the business investment relief on his Self- Assessment tax return for the tax year 2012-2013, and so does not pay any UK tax on what would otherwise have been a chargeable remittance of 拢1 million.

In July 2015 Charan disposes of 10,000 shares for 拢800,000 making a capital gain of 拢300,000. To comply with the appropriate mitigation steps Charan must move the entire 拢800,000 proceeds offshore or reinvest them in a target company. In this case Charan can choose to make a tax deposit with HMRC under the CTD scheme and, if he does so, the tax deposit will reduce the amount of the proceeds that must be taken offshore or reinvested.

Charan calculates the potential maximum Capital Gains Tax liability accruing on the gain from his part disposal as:

拢300,000 x 28%* = 拢84,000

Amount Y is therefore 拢884,000 (拢800,000 plus 拢84,000). As this is higher than the amount that must be taken offshore to satisfy the mitigation steps, Charan is able to make a tax deposit of the difference.

If Charan makes a tax deposit of 拢84,000, he need only take offshore or reinvest 拢716,000 (拢800,000 less 拢84,000) to complete the mitigation steps. Charan must also confirm, in writing, to HMRC that ITA07/s809VK is intended to apply to the tax deposit.

*Based on Capital Gains Tax rates at May

Example 2

Izaak has made a qualifying investment of 拢1 million. He was issued with 250,000 shares at a cost of 拢4 per share. He makes a claim for business investment relief on his Self-Assessment tax return for the tax year 2012-2013 and does not pay any UK tax on what would otherwise have been a remittance of 拢1 million. Izaak disposes of his holding over several years as illustrated below.

Event	2012-2013	2013-2014	2014-2015	2015-2016
Shares held at start of year	250,000	250,000	150,000	112,500
shares disposed of	-	100,000	37,500	112,500
Disposal proceeds (a)	-	拢500,000	拢200,000	拢700,000
Cost of shares disposed of: (b)	-	拢400,000	拢150,000	拢450,000
Chargeable gain: (a) - (b) = (c)	-	拢100,000	拢50,000	拢250,000
Maximum Capital Gains Tax liability1 (c) x 28% = (d)	-	拢28,000	拢14,000	拢70,000
Amount to be taken offshore or reinvested under mitigation steps (e)	-	拢500,000	拢200,000	拢300,000
Amount Y - amount to be taken offshore or reinvested plus maximum CGT liability (d) + (e) = (f)	-	拢528,000	拢214,000	拢370,000
Shortfall - difference between Y and disposal proceeds, unless disposal proceeds are greater than Y (f) - (e) = (g)	-	拢28,000	拢14,000	Disposal proceeds greater\n拢0
Amount that Izaak can deposit in CTD within 45 days of disposal	-	拢28,000	拢14,000	Not Applicable
Amount Izaak must take offshore or reinvest within 45 days of disposal if he chooses to make the maximum deposit under the CTD scheme (e) - (g)	-	拢472,000	拢186,000	拢300,000

飥咥ssumes rate in force at May 2012 continues to apply

There was no requirement for the taxpayer to make a tax deposit if they preferred to meet their Capital Gains Tax liabilities from other funds. If they did not make a tax deposit, the amount to be taken offshore or reinvested is not reduced.

Insufficient funds deposited

If there were insufficient funds deposited to pay the Capital Gains Tax liability the taxpayer had to meet the liability from other funds. If foreign income or gains were remitted to pay this liability, they would have been treated as a remittance and subject to tax in the normal way under section 809L of the Income Tax Act 2007.

There are conditions to be met when making a CTD [see RDRM34520].