CG66061 | Losses: loans to traders: general

Section 253(5) and (9) of the Taxation of Chargeable Gains Act (TCGA) 1992

Section 253(5) TCGA 1992 ensures that where a loss is deemed to accrue to a lender under section (3), see CG65940, or to a guarantor under section 253(4) TCGA 1992, see CG66020, and the lender or guarantor recovers any part of the outstanding principal (or interest thereon in the case of a guarantee), there is a chargeable gain equal to the proportion of the loss corresponding to the amount recovered. See CG66080 as to what amounts `correspond to' recoveries from co- guarantors.

For these purposes, `recovery' includes any money or money's worth received either by the claimant (or someone at his or her direction) in satisfaction of his or her right to recover or in consideration of his or her assignment of that right.

Where an assignment of such a right is otherwise than by way of a bargain at arm's length, the recovery is deemed to be of an amount equal to the market value of the rights assigned.

The example in CG66072 illustrates the treatment of the assignment of rights and recoveries in satisfaction of such rights.