Part 13Tax avoidance

C2C1Chapter 2Transfer of assets abroad

Annotations:
Modifications etc. (not altering text)
C2

Pt. 13 Ch. 2 applied by 1988 c. 1, s. 762ZA (as inserted (21.7.2008 with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 94)

C1

Pt. 13 Ch. 2 applied (with effect in accordance with art. 1(2)(3) Sch. 1 of the amending S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), regs. 1(1), 21

Charge where power to enjoy income

721Individuals with power to enjoy income as a result of relevant transactions

1

Income is treated as arising to such an individual as is mentioned in section 720(1) F9or 720A(1) in a tax year for income tax purposes if F7conditions A to C are met.

2

Condition A is that the individual has power in the tax year to enjoy income of a person abroad as a result of—

a

a relevant transfer,

b

one or more associated operations, or

c

a relevant transfer and one or more associated operations.

3

Condition B is that the income F1of the person abroad would be chargeable to income tax if it were the individual's and received by the individual in the United Kingdom.

F53A

Condition C is that the individual is UK resident for the tax year.

F3F83B

The amount of the income treated as arising under subsection (1) is (subject to sections 724 and 725) given by the following rules—

  • Rule 1 The amount is equal to the amount of the income of the person abroad if the individual—

    1. a

      is domiciled in the United Kingdom at any time in the tax year, or

    2. b

      is at any time in the tax year regarded for the purposes of section 718(1)(b) as domiciled in the United Kingdom as a result of section 835BA having effect because of Condition A in that section being met.

  • Rule 2 In any other case, the amount is equal to so much of the income of the person abroad as is not protected foreign-source income (see section 721A).

3BA

In a case in which rule 2 of subsection (3B) applies, so much of the income of the person abroad as is protected foreign-source income for the purposes of that rule counts as “protected income” for the purposes of section 733A(1)(b)(i).

3C

Subsection (1) does not apply if—

a

the individual is liable for income tax charged on the income of the person abroad by virtue of a charge not contained in this Chapter, and

b

all that income tax has been paid.

4

For the purposes of subsection (2), it does not matter whether the income F4of the person abroad may be enjoyed immediately or only later.

5

It does not matter for the purposes of this section—

F2a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F6b

whether the individual is UK resident for the tax year in which the relevant transfer is made (if different from the tax year mentioned in subsection (1)), or

c

whether the avoiding of liability to income tax is a purpose for which the transfer is effected.

6

For the circumstances in which an individual is treated as having the power to enjoy income for the purposes of this section, see section 722.