Clause 34 - Location of assets etc
Finance Bill
11:45 am
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
The clause brings into effect schedule 4. The clause and schedule together introduce a further anti-avoidance measure relating to capital gains tax by providing additional rules to determine where assets are situated for the purposes of tax on capital gains.
In most circumstances UK taxpayers are liable to tax on their capital gains regardless of where the asset in question is situated, but if individuals who live in the UK are domiciled abroad, their gains on disposals of assets situated outside the UK are liable to capital gains tax only if they remit the disposal proceeds to the UK. People who are resident abroad but carry on a business in this country are liable to tax on capital gains only in respect of disposals of business assets that are situated in the UK. The current tax rules for determining where assets are situated do not cover every circumstance. Where there is no specific rule in the tax code, the provisions and principles of common law apply to determine the situation of an asset. People have exploited some gaps in the tax rules to avoid tax on gains arising from the sale of assets abroad.