Family law solicitors have this week welcomed news that the Inland Revenue has reversed its position on imposing capital gains tax on the transfer of business assets in divorce proceedings.

The Inland Revenue had previously said that assets transferred by court order on divorce should be chargeable because the right to pursue a court action amounted to a non-cash consideration.

It has now amended its guidance following last year's High Court decision in G v G [2002] EWHC 1339, although this will only apply to transfers that took place on or after 31 July 2002 and to cases that had not settled by that date.

Nigel Shepherd, national committee member and past chairman of the Solicitors Family Law Association, said: 'It is encouraging to see the Inland Revenue amend its guidance, albeit belatedly, as a direct result of a family court judgment.

'However, it should be noted that the change will only affect transfers of business assets between husband and wife.

The impact of this will vary from case to case.'