ITTOIA05/S563 section modifies the rule in section 562 so that a
disposal consisting of the grant of an option is treated as taking
place at a later time than ITTOIA05/S562 would normally require.
The purpose is to allow loss relief arising on the grant of an
option to be set against a later profit. There are three conditions
that must be satisfied for the rule to apply.
Condition A – there must be a number of
related transactions designed to produce a guaranteed return of
which one is the grant of an option.
Condition B – at least one of the other
transactions should be entered into after the grant.
Condition C – there should be a disposal
that is not a grant of an option.
The grant of the option is then deemed to take place at the
same time as the next one of the transactions referred to in
Condition C takes place. As a result, a loss on the grant of an
option will coincide with any profit arising on the later
transaction.
TCGA92/S144 (2) and S144A (2) treat grants of options and
transactions by the grantor to fulfil his obligations as a single
transaction, and achieve the same effect as the timing rule in this
section. Where they apply, the TCGA rules take precedence over the
rules in Chapter 12, but they only apply to a narrower range of
transactions.
