Time of disposal and acquisition where asset disposed of under contract
Part II General Provisions relating to computation of gains and acquisitions and disposals of assets
(1)Subject to section 22(2), and subsection (2) below, where an asset is disposed of and acquired under a contract the time at which the disposal and acquisition is made is the time the contract is made (and not, if different, the time at which the asset is conveyed or transferred).
(2)If the contract is conditional (and in particular if it is conditional on the exercise of an option) the time at which the disposal and acquisition is made is the time when the condition is satisfied.
(a) the reference to “assets” were a reference to “property”, and
Defined in Sch.4ZA para.22(2) · see it in the full ActIn this sub-paragraph “asset” includes part of an asset.
Defined in Sch.8B para.6(1) · see it in the full Act(a) a share option (“the option”) has been granted to an individual—
(i) in accordance with the provisions of a Schedule 4 CSOP scheme, and
(ii) by reason of the individual’s office or employment as a director or employee of a company, and
(b) shares (“the relevant shares”) are acquired by the exercise of the option.
Defined in Sch.7D para.11(3) · see it in the full ActThe court limited section 28’s contract-timing deeming effect to its statutory context. It does not automatically determine “period of ownership” under sections 222 and 223. (see paras [23]-[25]) The court applied the contract-timing deeming rule to the timing of an actual acquisition or disposal, not as a general fiction fixing the relief period under sections 222 and 223. (see paras [16]; [23]-[25])
Provides the statutory framework for determining the time of disposal and acquisition under a contract. The court construed sections 28(1) and 28(2) together in fixing the disposal date. (see paras [8], [21]–[26]) The general contract-date rule is expressly subject to subsection (2), so it does not determine the disposal date where the contract is conditional. (see para [21]) A disposal under a conditional contract occurs when the condition is satisfied. Because the disposal agreement required the actual distribution of the shares, the disposal occurred immediately after that distribution. (see paras [21], [25]–[26])
Interprets section 28 as not altering whether an asset has been disposed of. The statutory deeming rule applies only after the underlying disposal is established, so it could not apply to the 1993 contract (see paras [61]; [66]). Interprets section 28(1) as a timing rule: it deems the time of a disposal and acquisition to be the time of contract only where a disposal and acquisition have actually occurred. It does not create a disposal where the transaction is settled by netting without transfer of the beneficial interest (see paras [36]-[37]; [49]-[53]).
What each judgment says about section 28 is in the case-law panel in the full Act.