TCGA 1992 s.17 – Disposals and acquisitions treated as made at market value

(1)Subject to the provisions of this Act, a person’s acquisition or disposal of an asset shall for the purposes of this Act be deemed to be for a consideration equal to the market value of the asset—

(a)where he acquires or, as the case may be, disposes of the asset otherwise than by way of a bargain made at arm’s length, and in particular where he acquires or disposes of it by way of gift or on a transfer into settlement by a settlor or by way of distribution from a company in respect of shares in the company, or

(b)where he acquires or, as the case may be, disposes of the asset wholly or partly for a consideration that cannot be valued, or in connection with his own or another’s loss of office or employment or diminution of emoluments, or otherwise in consideration for or recognition of his or another’s services or past services in any office or employment or of any other service rendered or to be rendered by him or another.

(2)Subsection (1) shall not apply to the acquisition of an asset if—

(a)there is no corresponding disposal of it, and

(b)there is no consideration in money or money’s worth or the consideration is of an amount or value lower than the market value of the asset.

Definitions used in section 17 8

assets: (a) the reference to “assets” were a reference to “property”, and
Defined in Sch.4ZA para.22(2) · see it in the full Act
asset: In this sub-paragraph “asset” includes part of an asset.
Defined in Sch.8B para.6(1) · see it in the full Act
market value: (5AA) In this Act “market value” in relation to shares of a given class in an open-ended investment company the prices of which are published regularly by the authorised corporate director of that company (whether or not those shares are also quoted in The Stock Exchange Daily Official List) shall mean an amount equal to the price so published on the relevant date, or if no price was published on that date, on the latest date before that date.
Defined in s.272(5AA) · see it in the full Act; (5) In this Act “market value” in relation to any rights of unit holders in any unit trust scheme the buying and selling prices of which are published regularly by the managers of the scheme shall mean an amount equal to the buying price (that is the lower price) so published on the relevant date, or if none were published on that date, on the latest date before.
Defined in s.272(5) · see it in the full Act; (1) In this Act “market value” in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market.
Defined in s.272(1) · see it in the full Act; (4) In particular, for the purposes of paragraphs 5 and 7 of this Schedule “market value” has the meaning given by paragraph 92 of Schedule 2 to that Act (determination of market value); and Part 8 of this Act has effect subject to this paragraph.
Defined in Sch.7D para.1(4) · see it in the full Act
settlement: (a) “settlement” has the same meaning as in section 620 of ITTOIA 2005, and
Defined in s.286(3ZA) · see it in the full Act; “settlement” has the meaning given by section 620 of ITTOIA 2005, and
Defined in s.97(7) · see it in the full Act
settlor: 12 The provisions of paragraphs 7 and 8(1), (3), (6) and (7) of Schedule 5 (meaning of “settlor”) apply for the purposes of this Schedule as they apply for the purposes of section 86 .
Defined in Sch.4A para.12 · see it in the full Act
company: “company” includes any body corporate or unincorporated association but does not include a partnership, and shall be construed in accordance with section 99 ;
Defined in s.288(1) · see it in the full Act; (5) In this paragraph “company” and “group” shall be construed in accordance with section 170(2) to (9).
Defined in Sch.2 para.5(5) · see it in the full Act
shares: “shares” includes stock;
Defined in s.288(1) · see it in the full Act; (5) In this paragraph, except in paragraphs (a) to (c) of sub-paragraph (6), “shares” includes an interest in shares.
Defined in Sch.7AC para.10(5) · see it in the full Act; (b) “shares” includes securities,
Defined in Sch.7 para.4(2) · see it in the full Act
the shares: (5) In sub-paragraphs (3) and (4) and in the following provisions of this Schedule references to “the shares” are to the shares referred to in sub-paragraph (1)(a).
Defined in Sch.7ZB para.1(5) · see it in the full Act; (a) references to “the shares” shall be construed in accordance with sub-paragraph (1) above, and
Defined in Sch.5B para.13(12) · see it in the full Act

Cases considering section 17 4

Stephen Davies v The Commissioners for HMRC

[2018] UKUT 130 (TCC) · 30 April 2018Disapplies

The market-value rule was a condition for section 144ZA to operate. The Tribunal held that section 144ZA applied and consequently disapplied the rule for determining the relevant acquisition cost. (see paras [17]; [31])

The Trustees of the Morrison 2002 Maintenance Trust & Ors v Revenue And Customs

[2019] EWCA Civ 93 · 6 February 2019Limits

Cited only. The market value rule was identified as the rule the scheme sought to displace through the option provisions; the appeal was resolved by the purposive Ramsay analysis rather than a standalone construction of the rule. (see paras [19]; [22]-[23])

Brian George Foulser & Anor v MacDougall (Officer of HM Revenue & Customs)

[2007] EWCA Civ 8 · 17 January 2007

Applies the market-value rule to the gifts of shares, treating a disposal by gift as a disposal for market-value consideration. (see para [6])

Revenue & Customs v Smallwood[2006] EWHC 1653 (Ch) · 6 July 2006

What each judgment says about section 17 is in the case-law panel in the full Act.

Amendments and notes

10 notes from legislation.gov.uk

Modifications

C77S. 17 excluded (retrospective to 11.1.1994) by Finance Act 1994 (c. 9), s. 252(3), Sch. 24 para. 7(4)
C78S. 17 excluded (with saving) (retrospective to 11.1.1994) by Finance Act 1994 (c. 9), s. 252(3), Sch. 24 para. 11(2)
C79S. 17 excluded (15.1.2001) by Transport Act 2000 (c. 38), s. 275(1), Sch. 26 para. 24(1) (with Sch. 26 para. 24(2)); S.I. 2000/3376, art. 2
C80S. 17 excluded (15.1.2001) by Transport Act 2000 (c. 38), s. 275(1), Sch. 26 para. 31(1) (with Sch. 26 para. 31(2)); S.I. 2000/3376, art. 2
C81S. 17 restricted (E.W.S.) (24.7.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 25; S.I. 2005/1909, art. 2, Sch.
C82S. 17 excluded (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 39(1)
C83S. 17 excluded (8.9.2008 for specified purposes) by Housing and Regeneration Act 2008 (c. 17), s. 325(1), Sch. 7 para. 7(2); S.I. 2008/2358, arts. 2(1), 3(1)
C84S. 17 restricted (30.9.2013) by The BRB (Residuary) Limited (Tax Consequences) Order 2013 (S.I. 2013/2242), arts. 1, 3(b)
C85S. 17(1) excluded (3.1.1995) by The Ports (Northern Ireland) Order 1994 (S.I. 1994/2809 (N.I. 16)), arts. 1(2), 18(4)
C86S. 17(1) excluded (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), ss. 653(3), 1329(1) (with Sch. 2 Pts. 1, 2, Sch. 2 para. 94)