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HMRC are consulting on legislation to replace the long-standing extra-statutory concession (ESC) D33.
The concession covers a number of circumstances in which a capital sum is received as compensation or damages for a right of action that is capital in the hands of the recipient and subject to capital gains tax under TCGA 1992, s 22.
It does not apply where a capital sum has been derived from any other type of asset including statutory rights or contractual rights.
HMRC are consulting on legislation to replace the long-standing extra-statutory concession (ESC) D33.
The concession covers a number of circumstances in which a capital sum is received as compensation or damages for a right of action that is capital in the hands of the recipient and subject to capital gains tax under TCGA 1992, s 22.
It does not apply where a capital sum has been derived from any other type of asset including statutory rights or contractual rights.
ESC D33 was introduced following the High Court decision in Zim Properties Ltd v Proctor [58 TC 371]. It was amended in January 2014 so that only the first £500,000 of a capital sum is exempt where there was no underlying asset. Exemption for amounts in excess of that amount had to be made in writing to HMRC.
The Revenue’s consultation seeks views on the introduction of a £1m exemption with sums in excess of that liable to capital gains tax. It also seeks views on legislating the relief given by the concession for personal compensation or damages and indemnities.
Responses should be emailed by 15 September.
