A charity’s gift

Perhaps readers could help resolve a “technical teaser” that is being discussed in our office.

TCGA 1992 s 256 exempts a charity from capital gains tax as long as the capital gain arising from the disposal of the charity’s chargeable asset is applied for its charitable purposes. The question which is causing the debate in our office is as follows.

If the charity simply gifts the asset for no consideration to the charitable recipient (for this purpose it should be assumed that the gift of the asset by the charity to the recipient in question is within its charitable objects) does the s 256 exemption still apply?

The “dissenters” in the office contend that it does not because the capital gain is being calculated by reference to market value (due to TCGA 1992 s 17) and not by reference to actual disposal proceeds...