CG78702 - Compensation: confiscated property: capital sums

In these cases we regard such compensation as chargeable to Capital Gains Tax as a capital sum, being money or money's worth, which is derived from an asset, TCGA92/S22. However, the asset is not the original property itself, but the statutory right to compensation arising from either the agreement between the two Governments or the foreign legislation.

The argument that the compensation derives from the statutory right to compensation is based on the judgement in Davenport v Chilver 57TC661.

Miss Chilver and her mother owned property in Latvia which had been confiscated in 1940. In 1969, Miss Chilver claimed compensation under the UK-USSR agreement of that year, see CG78710. She claimed in her own right and as a beneficiary of her mother's estate. The Court held that while the compensation for her own property represented compensation for the loss of that property, the compensation for her late mother's property was derived from her right to claim under the 1969 agreement. CG12050+ tell you more about this case.

We now consider that we would not distinguish between the two types of claim. If you are dealing with compensation received under either a later agreement, see CG78710+, or foreign legislation, see CG78750+, you should argue that it derives from the statutory right even if the person receiving the compensation originally owned the property.