Taxation of Chargeable Gains Act 1992, No. 12 (as amended)

The Taxation of Chargeable Gains Act 1992 (TCGA 1992) is a key piece of legislation in the United Kingdom that governs the taxation of capital gains. Here's a summary of its key aspects:

Purpose: The primary purpose of the Taxation of Chargeable Gains Act 1992 is to establish the framework for the assessment and taxation of chargeable gains, which arise when individuals or entities dispose of chargeable assets, such as shares, property, or investments. The legislation aims to ensure the fair and consistent taxation of capital gains and to provide rules and procedures for calculating and reporting capital gains for tax purposes.

Requirements:

1. Chargeable Assets: TCGA 1992 defines chargeable assets as any form of property, including tangible assets (e.g., real estate, vehicles) and intangible assets (e.g., shares, securities, goodwill), that are capable of being disposed of and giving rise to a chargeable gain or loss for tax purposes.
2. Calculation of Chargeable Gains: The legislation provides rules and methods for calculating chargeable gains and losses on the disposal of chargeable assets. This includes determining the base cost of the asset, allowable deductions, reliefs, and exemptions, and applying applicable tax rates to calculate the taxable gain.
3. Capital Gains Tax (CGT): TCGA 1992 imposes capital gains tax (CGT) on individuals, trustees, and personal representatives on chargeable gains arising from the disposal of chargeable assets. The tax rates and allowances applicable to capital gains may vary depending on factors such as the individual's income, the type of asset disposed of, and the duration of ownership.
4. Reporting and Compliance: Taxpayers are required to report chargeable gains and losses to HM Revenue and Customs (HMRC) on their annual self-assessment tax returns. This includes providing details of the disposals, calculations of chargeable gains, and any reliefs or exemptions claimed under TCGA 1992.

Applicability:

The Taxation of Chargeable Gains Act 1992 applies to individuals, trustees, and personal representatives who dispose of chargeable assets and realize chargeable gains for tax purposes. This includes:

• Individuals and taxpayers who dispose of chargeable assets, such as shares, property, investments, or other forms of property.
• Trustees and personal representatives acting on behalf of trusts or deceased estates who dispose of chargeable assets held within the trust or estate.
• Companies and corporate entities may also be subject to capital gains tax on certain chargeable gains, although specific rules and provisions may apply under corporation tax legislation.

Overall, TCGA 1992 provides the legal framework for the assessment and taxation of chargeable gains in the UK, ensuring that individuals, trustees, and entities pay tax on gains realized from the disposal of chargeable assets in accordance with applicable tax laws and regulations.

The Taxation of Chargeable Gains Act 1992 (TCGA 1992) outlines rules for the assessment and taxation of capital gains in the United Kingdom, but it does not explicitly specify evidence requirements. However, various provisions within the act necessitate the maintenance and provision of evidence to support compliance with capital gains tax (CGT) obligations. Here's a summary of how evidence factors into compliance with TCGA 1992:

1. Disposal Evidence: Taxpayers must maintain evidence of disposals of chargeable assets, including details of the date of disposal, the nature of the asset, the disposal proceeds, and any associated costs, such as legal fees or brokerage charges. This evidence supports the calculation of chargeable gains or losses for CGT purposes.
2. Base Cost Evidence: Taxpayers are required to establish the base cost or acquisition cost of chargeable assets, which is used to calculate the chargeable gain or loss on disposal. Evidence of the original purchase price, acquisition date, incidental acquisition costs, and any enhancements or improvements to the asset may be required to support the determination of the base cost.
3. Allowable Deductions Evidence: Taxpayers may claim allowable deductions, reliefs, or exemptions under TCGA 1992 to reduce the chargeable gain or loss on disposal. Evidence of allowable deductions, such as capital expenditure, transaction costs, valuation fees, and certain reliefs or exemptions, may be required to support the calculation of taxable gains or losses.
4. Documentation for Tax Reporting: Taxpayers must maintain accurate records and documentation to support their capital gains tax calculations and reporting obligations. This includes maintaining records of asset acquisitions and disposals, valuations, supporting documentation for allowable deductions or reliefs claimed, and relevant correspondence with HM Revenue and Customs (HMRC).
5. Compliance with Reporting Obligations: Taxpayers are required to report chargeable gains and losses to HMRC on their annual self-assessment tax returns. Evidence of capital gains calculations, supporting documentation, and compliance with reporting requirements under TCGA 1992 may be requested by HMRC during tax audits or investigations.

Overall, while TCGA 1992 does not specify explicit evidence requirements, compliance with its provisions necessitates the maintenance and provision of accurate, reliable, and comprehensive evidence to support various aspects of CGT compliance, including disposals, base cost calculations, allowable deductions, tax reporting, and compliance with HMRC requirements. Failure to maintain adequate evidence may result in penalties, assessments, or disputes with HMRC regarding CGT liabilities and compliance.