Section 3 | Gains attributed to UK resident individuals etc ^F1

(1)This section applies if—^F1

(a)a chargeable gain accrues at any time to a non-UK resident close company,^F1

(b)the gain is connected to avoidance (see section 3A),^F1

(c)the gain is not connected to a foreign trade or other economically significant foreign activities (see section 3A), and^F1

(d)apart from this section, some or all of the gain would not be chargeable to corporation tax on the company.^F1

(2)So much of the gain as would not otherwise be so chargeable is apportioned among participators, or indirect participators, in the company—^F1

(a)who are resident in the United Kingdom at that time, or^F1

(b)who are trustees of a settlement and are not resident in the United Kingdom at that time.^F1

(3)The proportion of the amount of the gain to be apportioned to each person corresponds to the extent of the person's interest in the company as a participator or indirect participator.^F1

(4)The amount apportioned to each person is treated as a chargeable gain accruing to the person.^F1

(5)No apportionment of any part of a gain is made to an individual if—^F1

(a)the gain accrues in a tax year which, as respects the individual, is a split year, and^F1

(b)the gain accrues in the overseas part of the year.^F1

(6)No apportionment of any part of a gain is made to a person if the total amount that would, apart from this subsection, be apportioned to—^F1

(a)the person, and^F1

(b)persons connected to the person,^F1

is 25% or less of the amount of the gain falling to be apportioned.

(7)A person (“P”) is an “indirect participator” in a company (“A”) if—^F1

(a)another company (“B”) which is a non-UK resident close company is a participator in A, and^F1

(b)P is a participator in B or P is a participator in a third non-UK resident close company which is participator in B,^F1

and so on through any number of non-UK resident close companies that are participators in other non-UK resident close companies.

(8)P's interest as an indirect participator in A in the case of any gain is determined by—^F1

(a)apportioning the gain among the participators in A according to the extent of their respective interests as participators, and^F1

(b)then further apportioning the gain apportioned to B among the participators in B according to the extent of their respective interests as participators, and so on through other companies.^F1

(9)So far as it would go to reduce or extinguish chargeable gains accruing, as a result of this section, to a person in a chargeable period, this section applies to a loss accruing to the company on the disposal of an asset in that period as it would apply if there had been a gain.^F1

(10)But—^F1

(a)this only applies in relation to that person, and^F1

(b)this section does not otherwise apply in relation to losses accruing to the company.^F1

(11)In this section “a non-UK resident close company” means a company—^F1

(a)which is not resident in the United Kingdom, and^F1

(b)which would be a close company if it were resident in the United Kingdom.^F1