Taxation of Chargeable Gains Act 1992 section 169C

Clawback of relief if settlement becomes settlor-interested etc

Section 169C provides for the clawback of hold-over relief on gifts of business assets to settlements where the settlement becomes settlor-interested or where a previous donor acquires an interest in the settlement during the clawback period.

• Where a person transfers assets to a settlement and claims hold-over relief under section 165 or section 260, that relief can be clawed back if, during the clawback period, a settlor has or acquires an interest in the settlement, or if a previous individual donor whose hold-over relief reduced the transferor's base cost acquires such an interest.
• If relief has already been claimed before the triggering event, a chargeable gain equal to the full held-over gain is treated as accruing to the transferor at the time the condition is first met, and the trustees' base cost is adjusted as though the relief had never applied — unless the transferor is an individual who has died before that time.
• If no claim for hold-over relief has been made before the triggering event, the relief is simply blocked and cannot be claimed at all in respect of that disposal.
• The clawback period runs from immediately after the disposal until six years after the end of the tax year in which the disposal was made, and the section is subject to exceptions in section 169D for historic building maintenance funds and settlements for disabled persons.