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EW 47: Legal defeasance
or “Calculating payments when someone else takes over financial obligations”
You could also call this:

“Rules for calculating tax when a business partnership ends or a look-through company stops operating”

This section of the law applies to you when you need to calculate a base price adjustment in your private capacity, as required by section EW 29(14), and you have an accrued entitlement.

In this situation, the law treats you as if you’ve paid all the consideration for the financial arrangement, but only for the part that relates to your non-private interests. This means you multiply the total consideration by the proportion of your owner’s or partner’s interests that are not private.

The law also treats you as if you’ve been paid the market value of your accrued entitlement on the date you disposed of it. Again, this is only for the part that relates to your non-private interests. You calculate this by multiplying the market value by the proportion of your owner’s or partner’s interests that are not private.

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Next up: EW 48: Anti-avoidance provisions

or “Rules to prevent unfair tax avoidance when calculating financial amounts”
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Part E Timing and quantifying rules
Financial arrangements rules: Consideration for cessation of LTCs and dissolution of partnerships

EW 47BCessation of LTCs and dissolution of partnerships

  1. This section applies when—

  2. a person is required to calculate a base price adjustment under section EW 29(14) in their private capacity; and
    1. the person has an accrued entitlement.

      1. The person is treated as—

      2. having paid all the consideration paid, or that is or will be payable, by them for or under the relevant financial arrangement, multiplied by the proportion of their owner’s interests or partner’s interests in the financial arrangement in their non-private capacity; and
        1. having been paid the market value, on the date of disposal, of the accrued entitlement, multiplied by the proportion of their owner’s interests or partner’s interests in the financial arrangement in their non-private capacity.

          Notes
          • Section EW 47B: inserted, on (with effect on 1 April 2011 and applying for income years beginning on or after that date), by section 82(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).