Where an asset is located can be extremely important in determining its exposure to UK tax – although possibly of less significance since 6 April 2025 when the remittance basis was largely abolished and long-term residence replaced domicile as the key determinant for tax in the UK.
TCGA 1992 s 275 provides the statutory situs rules for capital gains tax and this has recently been examined in the case of Sehgal and another v HMRC [2026] UKFTT 516 (TC) where the taxpayer claimed that his loan notes were situated in Jersey – and therefore outside the scope of CGT, at least until remitted.
They don’t make it easy. Under the general law (and for IHT purposes), a simple debt is situated where the debtor is resident. However, for the purposes of CGT it is where the creditor is resident (s 275(a)).
Debentures of a UK company are situated where the company was incorporated (s 275(da)). (However, I wonder what will happen with this test when they introduce the planned redomiciliation rules.)
In Sehgal, the question related to ‘registered debentures’; these are situated where they are registered (s 275(e)).
So the whole case revolved round what is meant by a ‘register’ for this purpose. I promise you – you really don’t want to know. What we can take from all this is that if you have loan notes in a foreign company, the rules about where they are situated (and therefore vulnerable for tax purposes) may be different depending on which tax you are looking at.
Where an asset is located can be extremely important in determining its exposure to UK tax – although possibly of less significance since 6 April 2025 when the remittance basis was largely abolished and long-term residence replaced domicile as the key determinant for tax in the UK.
TCGA 1992 s 275 provides the statutory situs rules for capital gains tax and this has recently been examined in the case of Sehgal and another v HMRC [2026] UKFTT 516 (TC) where the taxpayer claimed that his loan notes were situated in Jersey – and therefore outside the scope of CGT, at least until remitted.
They don’t make it easy. Under the general law (and for IHT purposes), a simple debt is situated where the debtor is resident. However, for the purposes of CGT it is where the creditor is resident (s 275(a)).
Debentures of a UK company are situated where the company was incorporated (s 275(da)). (However, I wonder what will happen with this test when they introduce the planned redomiciliation rules.)
In Sehgal, the question related to ‘registered debentures’; these are situated where they are registered (s 275(e)).
So the whole case revolved round what is meant by a ‘register’ for this purpose. I promise you – you really don’t want to know. What we can take from all this is that if you have loan notes in a foreign company, the rules about where they are situated (and therefore vulnerable for tax purposes) may be different depending on which tax you are looking at.
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