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CTA09/S861

Where recovery of the credit deferred under the rules described in CIRD47040 is triggered by the subsequent realisation of the asset in question and the realisation is only a part realisation then only a proportion of the credit is recovered. Similarly, on a further part realisation, only a proportion of the balance of the deferred credit is recovered. If subsequently the part of the asset retained is itself realised (within the six year period), or the 75% subsidiary relationship is broken, then the so far unrecovered part of the credit is taxed.

Example

Assume that a company ceases to be resident in the UK and elects for a credit arising under the rule described in CIRD47030 to be deferred. The amount of the deferred credit is 拢1000. There is subsequently a part realisation of the asset. Its market value at that time is 拢1500 and the value of the part retained 拢1000.

The proportion of the credit to be taxed is that proportion of the postponed credit that the reduction in the market value of the asset as a result of the part realisation bears to its market value beforehand. That is 拢1000 x [(拢1500 - 拢1000) / 拢1500] = 拢333.

Assume now a second part realisation where the market value of the asset immediately beforehand is 拢1000 (i.e. unchanged) and that of the part retained 拢200.

The credit to be taxed is 拢667 x [(拢1000 - 拢200) / 拢1000] = 拢534.

That leaves 拢133 of the credit [拢1000 - (拢333 + 拢534)] to be taxed on the occurrence of a further event triggering the recovery of the credit.