Section 147 | Works of art etc.

(1)A gain accruing on the disposal of an asset by way of gift shall not be a chargeable gain if the asset is property falling within subsection (2) of section 26 of the Capital Transfer Tax Act 1984 (gifts for public benefit) and the Treasury give a direction in relation to it under subsection (1) of that section.^F1

(2)A gain shall not be a chargeable gain if it accrues on the disposal of an asset with respect to which a capital transfer tax undertaking or an undertaking under the following provisions of this section has been given and—

(a)the disposal is by way of sale by private treaty to a body mentioned in Schedule 3 to the Capital Transfer Tax Act 1984 (museums, etc), or is to such a body otherwise than by sale, or^F1

(b)the disposal is to the Board in pursuance of section 230 of the Capital Transfer Tax Act 1984 or in accordance with directions given by the Treasury under section 50 or 51 of the Finance Act 1946 (acceptance of property in satisfaction of tax).^F1

(3)Subsection (4) below shall have effect in respect of the disposal of any asset which is property which has been or could be designated under section 31 of the Capital Transfer Tax Act 1984, being—^F1

(a)a disposal by way of gift, including a gift in settlement, or

(b)a disposal of settled property by the trustee on an occasion when, under section 54(1) or 55(1) above, the trustee is deemed to dispose of and immediately re-acquire settled property (other than any disposal on which by virtue of section 56 above no chargeable gain or allowable loss accrues to the trustee),^F2

if the requisite undertaking described in the said section 31 (maintenance, preservation and access) is given by such person as the Treasury think appropriate in the circumstances of the case.

(4)The person making a disposal to which subsection (3) above applies and the person acquiring the asset on the disposal shall be treated for all the purposes of this Act as if the asset was acquired from the one making the disposal for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss would accrue to the one making the disposal.

(5)If—

(a)there is a sale of the asset and capital transfer tax is chargeable under section 32 of the Capital Transfer Tax Act 1984 (or would be chargeable if a capital transfer tax undertaking as well as an undertaking under this section had been given), or^F1

(b)the Treasury are satisfied that at any time during the period for which any such undertaking was given it has not been observed in a material respect,

the person selling that asset or, as the case may be, the owner of the asset shall be treated for the purposes of this Act as having sold the asset for a consideration equal to its market value, and, in the case of a failure to comply with the undertaking, having immediately re-acquired it for a consideration equal to its market value.

(6)The period for which an undertaking under this section is given shall be until the person beneficially entitled to the asset dies or it is disposed of, whether by sale or gift or otherwise; and if the asset subject to the undertaking is disposed of—

(a)otherwise than on sale, and

(b)without a further undertaking being given under this section,

subsection (5) above shall apply as if the asset had been sold to an individual.References in this subsection to a disposal shall be construed without regard to any provision of this Act under which an asset is deemed to be disposed of.

(7)Where under subsection (5) above a person is treated as having sold for a consideration equal to its market value any asset within section 31(1)(c), (d) or (e) of the Capital Transfer Tax Act 1984, he shall also be treated as having sold and immediately re-acquired for a consideration equal to its market value any asset associated with it; but the Treasury may direct that the preceding provisions of this subsection shall not have effect in any case in which it appears to them that the entity consisting of the asset and any assets associated with it has not been materially affected.For the purposes of this subsection two or more assets are associated with each other if one of them is a building falling within the said section 31(1)(c) and the other or others such land or objects as, in relation to that building, fall within the said section 31(1)(d) or (e).^F1

(8)If in pursuance of subsection (5) above a person is treated as having on any occasion sold an asset and capital transfer tax becomes chargeable on the same occasion, then, in determining the value of the asset for the purposes of that tax, an allowance shall be made for the capital gains tax chargeable on any chargeable gain accruing on that occasion.

(9)In this section “capital transfer tax undertaking” means an undertaking under Chapter II of Part II or section 78 of, or Schedule 5 to, the Capital Transfer Tax Act 1984, sections 76 to 81 of the Finance Act 1976 or section 31 or 34 of the Finance Act 1975.^F3