569 Assets of insolvent person

Summary

This section deals with the position of a trustee or assignee in bankruptcy, under a deed of arrangement, a Debt Settlement Arrangement or a Personal Insolvency Arrangement. It provides that the vesting of the assets in the trustee or assignee in bankruptcy or the holding of assets by a personal insolvency practitioner and any subsequent retransfer of assets to the bankrupt, debtor or insolvent person are to be disregarded for capital gains tax purposes. Any chargeable gains accruing on disposals by the trustee or assignee in bankruptcy or by the personal insolvency practitioner are to be assessed on the trustee or assignee in bankruptcy or the personal insolvency practitioner. Where the bankrupt, debtor or insolvent person dies, the trustee or assignee in bankruptcy or the personal insolvency practitioner is regarded as acquiring the assets as personal representative of the deceased.

Details

(1) A “deed of arrangement” is a deed made under the Deeds of Arrangement Act, 1887.

“Insolvent person” means an individual who is insolvent and who has entered into a Debt Settlement Arrangement or a Personal Insolvency Arrangement (within the meaning of the Personal Insolvency Act 2012) with his or her creditors.

“Relevant person” means a personal insolvency practitioner (within the meaning of the Personal Insolvency Act 2012) who holds the assets of an insolvent person in trust for the benefit of creditors of that insolvent person under a Debt Settlement Arrangement or a Personal Insolvency Arrangement.

(2) In relation to assets held by a trustee or assignee in bankruptcy, under a deed of arrangement, a Debt Settlement Arrangement or a Personal Insolvency Arrangement, the assets are to be treated as if they were vested in the bankrupt, debtor or insolvent person and any transactions in the assets are deemed to be those of the bankrupt, debtor or insolvent person. The vesting of the assets and any retransfer to the bankrupt, debtor or insolvent person is to be disregarded for capital gains tax purposes. The trustee or assignee in bankruptcy or the personal insolvency practitioner is chargeable in respect of any chargeable gains that accrue to the trustee or assignee in bankruptcy or the personal insolvency practitioner.

(3) Where the bankrupt, debtor or insolvent person dies while his/her assets are still vested in a trustee or assignee in bankruptcy, or held by a personal insolvency practitioner, subsection (2) will not apply after the death. Instead, the provisions relating to death in section 573(2) will apply, the assets being treated as having passed from the deceased to the trustee or assignee in bankruptcy or the personal insolvency practitioner as if the trustee or assignee in bankruptcy or the personal insolvency practitioner were a personal representative of the deceased. Accordingly, there is no charge to capital gains tax where assets pass from the trustee or assignee in bankruptcy or the personal insolvency practitioner to legatees of the deceased.

(4) Where the assets of a deceased person are vested in a trustee in bankruptcy or a personal insolvency practitioner after death, subsection (2) does not apply and the trustee or personal insolvency practitioner takes the assets as the personal representative of the deceased.

Relevant Date: Finance Act 2021