A contingent right to receive a further sum is a chose in action and thus an ‘asset’.
Ingles agreed to sell 60 shares in a private company for £750 per share payable immediately plus a liability to pay additional consideration (calculated by reference to future profit levels) subject to certain contingencies.
The contingencies were satisfied two years later and a further £2,825 per share became payable.
The Crown contended that the contingent right to the further payment was a separate asset.
Held, the taxpayer's right to the deferred consideration was an 'asset' within s22(1) Finance Act 1965.
The payment of the deferred consideration to the taxpayer was a capital sum derived by him from that asset.
Furthermore where a capital sum was derived from an asset there was a disposal of the asset under s 22(3) whether or not the person paying the capital sum had acquired the asset (disagreed with Walton J).
Ask questions 🙋 Get answers 📔 It's simple 👁️👄👁️
Our AI is educated by the highest scoring students across all subjects and schools. Join hundreds of your peers today.
Get StartedThese product samples contain the same concepts we cover in this case.
Tax Law | Capital Gains Tax Notes (17 pages) |