TCGA 1992 s.185 – Deemed disposal of assets on company ceasing to be resident in U.K

(1) This section [^F1416 applies ^F1416] to a company if, at any time (“the relevant time”), the company ceases to be resident in the United Kingdom.

(2)The company shall be deemed for all purposes of this Act—

(a)to have disposed of all its assets, other than assets excepted from this subsection by subsection (4) below, immediately before the relevant time; and

(b)immediately to have reacquired them,

at their market value at that time.

(3)Section 152 shall not apply where the company—

(a)has disposed of the old assets, or of its interest in those assets, before the relevant time; and

(b)acquires the new assets, or its interest in those assets, after that time,

unless the new assets are excepted from this subsection by subsection (4) below.

(4)If at any time after the relevant time the company carries on a trade in the United Kingdom through a [^F1417permanent establishment^F1417] —

(a)any assets which, immediately after the relevant time, are situated in the United Kingdom and are used in or for the purposes of the trade, or are used or held for the purposes of the [^F1417permanent establishment^F1417] , shall be excepted from subsection (2) above; and

(b)any new assets which, after that time, are so situated and are so used or so held shall be excepted from subsection (3) above;

and references in this subsection to assets situated in the United Kingdom include references to exploration or exploitation assets and to exploration or exploitation rights.

[^F1418 (4A)Subsection (4) applies to an overseas life insurance company in the case of its long-term business with—

(a) the omission from paragraph (a) of the words “are situated in the United Kingdom and”; and

(b) the omission from paragraph (b) of the words “are so situated and”. ^F1418]

(5)In this section—

(a) “designated area”, “exploration or exploitation activities” and “exploration or exploitation rights” have the same meanings as in section 276;

(b) “exploration or exploitation assets” means assets used or intended for use in connection with exploration or exploitation activities carried on in the United Kingdom or a designated area;

and a company shall not be regarded for the purposes of this section as ceasing to be resident in the United Kingdom by reason only that it ceases to exist.

Definitions used in section 185 12

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
the residents: (b) if 2 or more of them are then resident ... in the United Kingdom (“the residents”) it shall be treated as being as many equal capital payments as there are residents and each of them shall be treated as receiving one of the payments.
Defined in s.96(4) · see it in the full Act
resident: “resident” means resident in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013 ;
Defined in s.288(1) · see it in the full Act
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
the relevant time: (2) In this paragraph “the relevant time”, in relation to a group of companies, and in relation to each of the elections referred to in paragraph 4(8) above, is the first occasion after 19th March 1968 when any company which is then a member of a group disposes of quoted securities of a kind covered by that election, and for the purposes of paragraph 4(11) above that occasion is, in relation to the group, “the first relevant disposal".
Defined in Sch.2 para.5(2) · see it in the full Act; 10 (1) For the purposes of this Part of this Schedule, the current use value of an interest in land shall be ascertained in accordance with the following provisions of this Part, and in this Part the time as at which current use value is to be ascertained is referred to as “the relevant time”.
Defined in Sch.2 para.10(1) · see it in the full Act; (b) but for this paragraph, the election would, as a result of paragraph 20, have ceased to have effect from a particular time for all purposes of this Part of this Schedule (“the relevant time”),
Defined in Sch.5AAA para.28(1) · see it in the full Act; (b) but for this paragraph, the election would, as a result of paragraph 20, have ceased to have effect from a particular time (“the relevant time”) for all purposes of this Part of this Schedule, and
Defined in Sch.5AAA para.30(1) · see it in the full Act
relevant time: and, in the case of a transfer of property from Settlement 1 to Settlement 2 in relation to which section 68B applies, “relevant time” in relation to a settlor of the transferred property in respect of Settlement 2 includes any time which, immediately before the time of the disposal by the trustees of Settlement 1, was a relevant time in relation to that settlor in respect of Settlement 1.
Defined in s.69(2C) · 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
the new assets: Any shares so received by the transferor in exchange for the business are referred to below as “the new assets”.
Defined in s.162(1) · see it in the full Act
trade: “trade” has the same meaning as in the Income Tax Acts;
Defined in s.288(1) · see it in the full Act; (b) “trade”, “profession” and “vocation” have the same meaning as in the Income Tax Acts.
Defined in s.165(8) · see it in the full Act; (9) In this section and Schedule 7 and in determining whether a company is a trading company for the purposes of this section and that Schedule, the expression “trade” shall be taken to include the occupation of woodlands where the woodlands are managed by the occupier on a commercial basis and with a view to the realisation of profits.
Defined in s.165(9) · see it in the full Act
permanent establishment: “permanent establishment”, in relation to a company, is to be read in accordance with Chapter 2 of Part 24 of CTA 2010;
Defined in s.288(1) · see it in the full Act
overseas: (b) “overseas” meant anywhere outside that territory, and
Defined in s.222B(8) · see it in the full Act

Cases considering section 185 3

The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Nos. 1 to 4 v The Commissioners for HMRC

[2026] EWCA Civ 744 · 12 June 2026

The company exit-charge provision was treated as part of a charge capable of justification. The EU-law defect was the absence of deferred payment, remedied by interpretation of the payment provisions. (see paras [11]; [29]; [120])

The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers 1 to 4 & Anor v The Commissioners for HMRC

[2024] UKUT 319 (TCC) · 8 October 2024

Section 185 validly imposed the deemed-disposal exit charge on a company ceasing UK residence. The requisite EU-law remedy concerned deferred payment under section 59D of the Taxes Management Act 1970. (see paras [134]-[142])

Snell v HM Revenue & Customs

[2006] EWHC 3350 (Ch) · 21 December 2006

Used by way of contrast. The court noted that a body corporate’s change of residence gives rise to a deemed disposal, but this did not determine the construction of section 137 for individuals (see para [31]).

What each judgment says about section 185 is in the case-law panel in the full Act.

Amendments and notes

5 notes from legislation.gov.uk

Amendments

F1416Word in s. 185(1) substituted (with effect in accordance with Sch. 8 para. 9(5) of the amending Act) by Finance Act 2019 (c. 1), Sch. 8 para. 9(3)
F1417Words in s. 185(4) substituted (with effect in accordance with s. 153(4) of the amending Act) by Finance Act 2003 (c. 14), s. 153(1)(b)
F1418S. 185(4A) inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 78

Modifications

C304Ss. 170-192 restricted (27.7.1999) by Commonwealth Development Corporation Act 1999 (c. 20), Sch. 3 paras. 1, 4(1)
C360S. 185 excluded (27.7.1999) by Commonwealth Development Corporation Act 1999 (c. 20), Sch. 3 paras. 1, 3(4)