CG12970 | Capital sums derived from assets: interaction of s22(1) and s251(1) TCGA92

There may be a question as to whether s251(1) TCGA92 applies to prevent a gain on a disposal under s22(1) TCGA92 from being a chargeable gain, on the grounds that the right to receive the capital sum constituted a debt owed to the recipient immediately before it was paid.

HMRC considers that s22(1) TCGA92 applies in such cases because the capital sum derived from intangible rights held by the recipient which subsequently matured into a debt. As the intangible rights are not themselves a debt within s251(1) TCGA92 any gain which accrues is a chargeable gain. This view is supported by Lord Fraser’s comments in Marren v Ingles (54 TC 76) at page 100, where he concludes that what is now s251(1) TCGA92 only applies to obligations which had been debts from the time they came into existence or were acquired by the taxpayer.