Part 13U.K.Tax avoidance

Chapter 2U.K.Transfer of assets abroad

Charge where benefit receivedU.K.

731Charge to tax on income treated as arising under section 732U.K.

(1)Income tax is charged on income treated as arising to an individual under section 732 ([F1individuals] receiving a benefit as a result of relevant transactions).

[F2(1A)But where the individual is non-UK resident for the tax year in which a benefit is received, there is a charge to tax under this section on any matched deemed income—

(a)only so far as that matched deemed income would under section 735A (if it applied also for this purpose) be matched with an amount of relevant income that is protected income for the purposes of section 733A(1)(b)(i) (see sections 721(3BA) and 728(1B)), and

(b)only if—

(i)the individual is the settlor of the settlement concerned, or

(ii)the benefit is received by the individual at a time when the individual is a close member of the family of the settlor of that settlement.

(1B)For the purposes of subsection (1A)—

(a)“matched deemed income” means income which—

(i)is treated by section 732 as arising to the individual, and

(ii)would, if section 735A applied also for this purpose, be matched under that section with the benefit, and

(b)a person is a close member of the family of the settlor of a settlement if the person is—

(i)the settlor's spouse or civil partner, or

(ii)a child of the settlor, or of a person within sub-paragraph (i), if the child has not reached the age of 18;

and section 733A(7) (persons living together) applies also for the purposes of paragraph (b).]

[F3(1C)Subsection (1A) does not restrict the charge to tax under this section on income treated as arising to the individual by section 733C or 733E (onward gifts: recipient or settlor treated as individual to whom income is treated as arising).]

(2)Tax is charged under this section on the amount of income treated as arising for the tax year.

[F4(2A)But see [F5sections 735, 735B and 735C] (non-UK domiciled individuals to whom remittance basis applies).]

(3)The person liable for any tax charged under this section is the individual to whom the income is treated as arising[F6, but this is subject to section 733A.]

(4)For exemptions from the charge under this section, see sections 736 to [F7742A] (exemptions where no tax avoidance purpose or genuine commercial transaction [F8, etc]).

732 [F9Individuals] receiving a benefit as a result of relevant transactionsU.K.

(1)This section applies if—

(a)a relevant transfer occurs,

(b)an individual [F10receives a benefit in a tax year],

(c)the benefit is provided out of assets which are available for the purpose as a result of—

(i)the transfer, or

(ii)one or more associated operations,

[F11(d)where there is a time in the year when the individual is relevantly domiciled, the individual is not liable to income tax under section 720 or 727 by reference to the transfer, and]

(e)the individual is not liable to income tax [F12, under any provision that is none of section 731 of this Act and sections 643A, 643J and 643L of ITTOIA 2005,] on the amount or value of the benefit F13....

(2)Income is treated as arising to the individual for income tax purposes for any tax year for which section 733 provides that income arises.

(3)Also see that section for the amount of income treated as arising for any such tax year.

[F14(4)For the purposes of subsection (1)(d), the individual is “relevantly domiciled” at any time if at that time—

(a)the individual is domiciled in the United Kingdom, or

(b)the individual is 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.]

733Income charged under section 731U.K.

(1)To find the amount (if any) of the income treated as arising under section 732(2) for any tax year in respect of benefits provided as mentioned in section 732(1)(c) take the following steps.

Step 1

Identify the amount or value of such benefits received by the individual in the tax year and in any earlier tax years in which section 732 has applied.

The sum of those amounts and values is “the total benefits”.

Step 2

Deduct from the total benefits the total amount of income treated as arising to the individual under section 732(2) for earlier tax years as a result of the relevant transfer or associated operations.

The result is “the total untaxed benefits” [F15except that, where any of that income is matched deemed income for the purposes of section 731(1A), that matched deemed income is to be deducted only so far as it is matched deemed income on which tax has been charged under section 731 for an earlier tax year.]

Step 3

Identify the amount of any income which—

(a)arises in the tax year to a person abroad, and

(b)as a result of the relevant transfer or associated operations can be used directly or indirectly for providing a benefit for the individual.

That amount is “the relevant income of the tax year” in relation to the individual and the tax year.

Step 4

Add together the relevant income of the tax year and the relevant income of earlier tax years in relation to the individual (identified as mentioned in Step 3).

The sum of those amounts is “total relevant income”.

Step 5

Deduct from total relevant income—

(a)the amount deducted at Step 2, and

(b)any other amount which may not be taken into account because of section 743(1) and (2) (no duplication of charges).

The result is “the available relevant income”.

Step 6

Compare the total untaxed benefits and the available relevant income.

The amount of the income treated as arising under section 732(2) for any tax year is the total untaxed benefits unless the available relevant income is lower.

If the available relevant income is lower, it is the amount of income treated as so arising.

(2)Subsection (1) is subject to section 734 (reduction in amount charged: previous capital gains tax charge).

(3)See also section 740(5) to (7) (which makes provision about relevant income and benefits where relevant transactions include both transactions before 5 December 2005 and transactions after 4 December 2005 and exemptions under this Chapter cease to apply).

[F16733ASettlor liable for section 731 charge on closely-related beneficiaryU.K.

(1)Subsections (2) and (3) apply if—

(a)an amount of income is treated as arising to an individual under section 732 for a tax year,

(b)under section 735A (if it applied also for this purpose) that amount would be matched—

(i)with an amount of relevant income that is protected income for the purposes of this sub-paragraph (see sections 721(3BA) and 728(1B)), and

(ii)with a benefit received by the individual at a time when the individual was a close member (see subsection (7)) of the family of the settlor of the settlement concerned,

(c)there is no time in the year when the trustees of the settlement are resident in the United Kingdom,

(d)there is a time in the year when the settlor is resident in the United Kingdom,

(e)there is no time in the year when the settlor is domiciled in the United Kingdom, and

(f)there is no time in the year when the settlor is 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.

(2)If—

(a)the individual is not resident in the United Kingdom at any time in the year, or

(b)section 809B, 809D or 809E (remittance basis) applies to the individual for the year and none of the amount mentioned in subsection (1)(a) of this section is remitted to the United Kingdom in the year,

the settlor is liable for the tax charged under section 731 on that amount as if that amount were income arising to the settlor in the year (and the individual is not liable in any later year for income tax on that amount).

(3)If—

(a)section 809B, 809D or 809E (remittance basis) applies to the individual for the year, and

(b)part only of the amount mentioned in subsection (1)(a) of this section is remitted to the United Kingdom in the year,

the settlor is liable for the tax charged under section 731 on the remainder of that amount as if that remainder were income arising to the settlor in the year (and the individual is not liable in any later year for income tax on that remainder).

(4)The amount mentioned in subsection (1)(a) may be the whole, or part only, of the amount treated as arising to the individual under section 732 for the year in the case of the relevant transfer and its associated operations.

(5)Where any tax for which the settlor is liable as a result of subsection (2) or (3) is paid, the settlor is entitled to recover the amount of the tax from the individual.

(6)For the purpose of recovering that amount, the settlor is entitled to require an officer of Revenue and Customs to give the settlor a certificate specifying—

(a)the amount of the income concerned, and

(b)the amount of tax paid,

and any such certificate is conclusive evidence of the facts stated in it.

(7)For the purposes of subsection (1)(b)(ii), a person is a close member of the family of the settlor [F17at any time if the settlor is living at that time and—

(a)the person is the settlor's spouse or civil partner at that time, or

(b)the person—

(i)is a child of the settlor, or of a person who at that time is the settlor's spouse or civil partner, and

(ii)at that time has not reached the age of 18.]

[F18(8)For the purposes of subsection (7), two people living together as if they were a married couple or civil partners are treated as if they were spouses or civil partners of each other.]

(9)Sections 809L to 809Z6 (remittance basis: rules about when income is remitted, including rule treating pre-arising remittances of deemed income as made when the income arises) apply for the purposes of this section.]

[F19733BRecipients of onward giftsU.K.

(1)Sections 733C to 733E apply if—

(a)an amount of income is treated as arising under section 732 to an individual (“the original beneficiary”) in a tax year (“the arising year”) but neither by section 733C nor by section 733E,

(b)under section 735A (if it applied also for this purpose) that amount would be matched—

(i)with an amount of relevant income that is protected income for the purposes of section 733A(1)(b)(i) (see sections 721(3BA) and 728(1B)), and

(ii)with the whole or part of a benefit received by the original beneficiary,

(c)at the time that benefit is received by the original beneficiary (“the distribution time”)—

(i)there are arrangements, or there is an intention, as regards the (direct or indirect) passing-on of the whole or part of that benefit to another person, and

(ii)it is reasonable to expect that, in the event of the whole or part of that benefit being passed on to another person as envisaged by the arrangements or intention, that other person will be UK resident when they receive at least part of what is passed on to them,

(d)the original beneficiary makes, directly or indirectly, a gift (“the onward payment”) to a person (“the subsequent recipient”)—

(i)at the distribution time, or at any later time in the 3 years beginning with the start time, or

(ii)at any time before the distribution time and, it is reasonable to assume, in anticipation of receipt of the benefit mentioned in paragraph (b)(ii),

(e)the gift is of or includes—

(i)the whole or part of the benefit mentioned in paragraph (b)(ii),

(ii)anything that (wholly or in part, and directly or indirectly) derives from, or represents, the whole or part of that benefit, or

(iii)any other property, but only if the benefit mentioned in paragraph (b)(ii) is provided with a view to enabling or facilitating, or otherwise in connection with, the making of the gift of the property to the subsequent recipient,

(f)except where an individual is liable as a result of section 733A(2) or (3) for the tax charged under section 731 on the amount mentioned in paragraph (a), either—

(i)the original beneficiary is non-UK resident for the arising year, or

(ii)section 809B or 809D or 809E (remittance basis) applies to the original beneficiary for the arising year and none of the amount mentioned in paragraph (a) is relevantly remitted before the end of the charging year, and

(g)where an individual is liable as a result of section 733A(2) or (3) for the tax charged under section 731 on the amount mentioned in paragraph (a), section 809B or 809D or 809E applies to that individual for the arising year and none of the amount mentioned in paragraph (a) is relevantly remitted before the end of the charging year.

(2)If—

(a)the amount mentioned in subsection (1)(a) is not treated as arising by section 733D (and neither by section 733C nor by section 733E),

(b)except where an individual is liable as a result of section 733A(2) or (3) for the tax charged under section 731 on that amount, section 809B or 809D or 809E applies to the original beneficiary for the arising year,

(c)where an individual is liable as a result of section 733A(2) or (3) for the tax charged under section 731 on that amount, section 809B or 809D or 809E applies to that individual for the arising year, and

(d)part only of that amount is relevantly remitted before the end of the charging year,

subsection (1)(a) is to be treated as referring instead only to the remainder of that amount.

(3)The original beneficiary is not liable to tax for any year after the charging year on so much of the amount mentioned in subsection (1)(a) as is—

(a)treated as arising to the subsequent recipient by section 733C, or

(b)treated as arising to the settlor by section 733E;

and the settlor is not is liable under section 733A(2) or (3) to tax for any year after the charging year on so much of the amount mentioned in subsection (1)(a) as is treated as arising to the subsequent recipient by section 733C.

(4)For the purposes of subsection (1)(d)(i)—

(a)if the amount mentioned in subsection (1)(a) is not one that is treated as arising by section 733D, “the start time” is the time the benefit mentioned in subsection (1)(b) is provided to the original beneficiary, and

(b)if the amount mentioned in subsection (1)(a) is one that is treated as arising by section 733D in connection with the operation of this section on a previous occasion, “the start time” is the time given by this subsection as the start time on that occasion.

(5)Where the onward payment is made as mentioned in subsection (1)(d)(ii), the onward payment is to be treated—

(a)for the purposes of the provisions of this section following subsection (1)(d), and

(b)for the purposes of sections 733C to 733E,

as made immediately after, and in the tax year containing, the distribution time.

(6)Where subsection (1)(d) and (e) are met in any case, it is to be presumed (unless the contrary is shown) that subsection (1)(c) is also met in that case.

(7)In this section—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),

• “the charging year” means the gift year or, if later, the matching year,

• “gift” includes any benefit,

• “the gift year” means the tax year in which the onward payment is made, but see subsection (5),

• “make”, in relation to a gift that is a benefit, means provide,

• “the matching year” means the first tax year in which the matching mentioned in subsection (1)(b) would occur,

• “relevantly remitted” means remitted to the United Kingdom in a tax year for which the original beneficiary is UK resident but, where an individual is liable as a result of section 733A(2) or (3) for the tax charged under section 731 on the amount mentioned in subsection (1)(a), means remitted to the United Kingdom in a tax year for which that individual is UK resident, and

• “the settlor” means the settlor of the settlement, mentioned in section 721A(3) or (4) or 729A(3) or (4), which because of subsection (1)(b)(i) is the settlement concerned.

(8)Sections 742C to 742E (value of benefit provided to a person) apply in relation to the onward payment as if references in those sections to a benefit provided were references to a gift made.

(9)Sections 809L to 809Z6 (remittance basis: rules about when income is remitted, including rule treating pre-arising remittances of deemed income as made when the income arises)—

(a)apply for the purposes of this section and sections 733C to 733E, and

(b)apply for those purposes in relation to references to remittance of the onward payment as if the onward payment were relevant foreign income of the subsequent recipient.

733CCases where income treated as arising to recipient of onward giftU.K.

(1)Subsection (3) applies if—

(a)this section applies (see section 733B(1)), and

(b)the subsequent recipient is UK resident for the gift year, and

(c)the subsequent recipient is UK resident for the matching year if that is later than the gift year, and

(d)none of sections 809B, 809D and 809E applies to the subsequent recipient for the charging year.

(2)Subsection (3) also applies if—

(a)this section applies (see section 733B(1)), and

(b)the subsequent recipient is UK resident for the gift year, and

(c)the subsequent recipient is UK resident for the matching year if that is later than the gift year, and

(d)section 809B, 809D or 809E applies to the subsequent recipient for the charging year, and

(e)the whole, or part only, of the onward payment is remitted to the United Kingdom in the charging year.

(3)Section 731 has effect—

(a)as if the subsequent recipient were an individual to whom income is treated as arising under section 732 for the charging year, and

(b)as if, subject to subsection (4), the amount of that income—

(i)were equal to the amount or value of so much of the onward payment as is within any of sub-paragraphs (i) to (iii) of section 733B(1)(e), or

(ii)were, where this subsection applies because of subsection (2) and part only of that much of the onward payment is remitted to the United Kingdom in the charging year, equal to the amount or value of that part.

(4)The amount given by subsection (3) (before adjustment under this subsection) is to be adjusted as follows—

(a)deduct any part of the amount on which the subsequent recipient is liable to income tax otherwise than under this section, and

(b)if following any adjustment under paragraph (a) the amount exceeds the amount mentioned in section 733B(1)(a), deduct the excess.

733DCases where deemed income attributed to recipient of onward giftU.K.

(1)Subsection (3) applies if this section applies (see section 733B(1)) and—

(a)the subsequent recipient is non-UK resident for the gift year, or

(b)the matching year is later than the gift year and the subsequent recipient is UK resident for the gift year but non-UK resident for the matching year.

(2)Subsection (3) also applies if—

(a)this section applies (see section 733B(1)), and

(b)the subsequent recipient is UK resident for the gift year, and

(c)the subsequent recipient is UK resident for the matching year if that is later than the gift year, and

(d)section 809B, 809D or 809E applies to the subsequent recipient for the charging year, and

(e)none, or part only, of the onward payment is remitted to the United Kingdom in the charging year.

(3)Section 733B(1)(a) has effect—

(a)as if the subsequent recipient were an individual to whom income is treated as arising under section 732 for the charging year, and

(b)as if, subject to subsection (4), the amount of that income—

(i)were equal to the amount or value of so much of the onward payment as is within any of sub-paragraphs (i) to (iii) of section 733B(1)(e) and is not treated as arising to someone other than the subsequent recipient as a result of the operation of section 733E, or

(ii)were, where this subsection applies because of subsection (2) and part only of that much of the onward payment is remitted to the United Kingdom in the charging year, equal to the amount or value of the remainder of that much of the onward payment.

(4)The amount given by subsection (3) (before adjustment under this subsection) is to be adjusted as follows: if that amount exceeds the amount mentioned in section 733B(1)(a) in the case of the original beneficiary, deduct the excess.

(5)Where the amount mentioned in section 733B(1)(a) is one treated as arising by this section in connection with the operation of section 733B and this section on a previous occasion, section 733B(1) has effect—

(a)with the omission of its paragraphs (b) and (c),

(b)as if the reference in its paragraph (d) to the benefit mentioned in its paragraph (b)(ii) were, instead, to what was the onward payment on that previous occasion,

(c)as if the references in its paragraph (d) to the distribution time were, instead, to the time when that onward payment was made, and

(d)as if the references in its paragraph (e) to the benefit mentioned in its paragraph (b)(ii) were, instead, to so much of that onward payment as was on that previous occasion within any of sub-paragraphs (i) to (iii) of its paragraph (e).

733ECases where settlor liable following onward giftU.K.

(1)Subsection (3) applies if—

(a)this section applies (see section 733B(1)),

(b)the subsequent recipient is a close member of the settlor's family when the onward payment is made,

(c)the subsequent recipient is UK resident for the charging year,

(d)section 809B, 809D or 809E applies to the subsequent recipient for the charging year,

(e)none, or part only, of the onward payment is remitted to the United Kingdom in the charging year,

(f)there is a time in the charging year when the settlor is UK resident,

(g)there is no time in the charging year when the settlor is domiciled in the United Kingdom, and

(h)there is no time in the charging year when the settlor is 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.

(2)Subsection (3) also applies if—

(a)this section applies (see section 733B(1)),

(b)the subsequent recipient is a close member of the settlor's family when the onward payment is made,

(c)the subsequent recipient is non-UK resident for the charging year,

(d)there is a time in the charging year when the settlor is UK resident,

(e)there is no time in the charging year when the settlor is domiciled in the United Kingdom, and

(f)there is no time in the charging year when the settlor is 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.

(3)Section 731 applies—

(a)as if the settlor were an individual to whom income is treated as arising under section 732 for the charging year, and

(b)as if, subject to subsection (4), the amount of that income—

(i)were equal to the amount or value of so much of the onward payment as is within any of sub-paragraphs (i) to (iii) of section 733B(1)(e), or

(ii)were, where this subsection applies because of subsection (1) in a case where part only of that much of the onward payment is remitted to the United Kingdom in the charging year, equal to the amount or value of the remainder of that much of the onward payment.

(4)The amount given by subsection (3)(b) (before adjustment under this subsection) is to be adjusted as follows—

(a)deduct any part of the amount on which the settlor is liable to income tax otherwise than under this section, and

(b)if following any adjustment under paragraph (a) the amount exceeds the amount mentioned in section 733B(1)(a), deduct the excess.

(5)Where any tax for which the settlor is liable as a result of subsections (3) and (4) is paid, the settlor is entitled to recover the amount of the tax from the subsequent recipient.

(6)For the purpose of recovering that amount, the settlor is entitled to require an officer of Revenue and Customs to give the settlor a certificate specifying—

(a)the amount of the income concerned, and

(b)the amount of tax paid,

and any such certificate is conclusive evidence of the facts stated in it.

(7)In this section—

(a)“the settlor” means the settlor of the settlement, mentioned in section 721A(3) or (4) or 729A(3) or (4), which because of section 733B(1)(b)(i) is the settlement concerned, and

(b)“close member”, in relation to the family of the settlor, is to be read in accordance with section 733A(7) and (8).]

734Reduction in amount charged: previous capital gains tax chargeU.K.

(1)This section applies if—

(a)benefits provided as mentioned in section 732(1)(c) are received in a tax year,

F20(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F20(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F21(d)chargeable gains are treated by section 87, 87K, 87L or 89(2) of, or paragraph 8 of Schedule 4C to, TCGA 1992 as accruing to a person in that or a subsequent tax year by reference (direct or indirect) to the whole or part of any benefits so provided.]

(2)For any tax year after one in which such chargeable gains are so treated, the amount of income treated as arising to the individual under section 732(2) in respect of benefits provided as mentioned in section 732(1)(c) as a result of the transfer or operations in question is calculated as follows.

(3)The amount is calculated under section 733(1) as if the total untaxed benefits were reduced by the amount of those gains.

(4)In this section “the total untaxed benefits” [F22has] the same meaning as in section 733(1) (see [F23Step 2] ).

[F24(5)References in this section to chargeable gains treated as accruing to an individual include offshore income gains treated as arising to the individual (see [F25regulations 20 and 22 to 24 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)]).]

[F26734AReduction in amount charged: previous settlements chargeU.K.

(1)This section applies if—

(a)benefits provided as mentioned in section 732(1)(c) are received in a tax year, and

(b)income is treated by section 643A, 643J or 643L of ITTOIA 2005 as arising to a person in that or a subsequent tax year by reference (direct or indirect) to the whole or part of any benefits so provided.

(2)For any tax year after one in which such income is so treated, the amount of income treated as arising to the individual under section 732(2) in respect of benefits provided as mentioned in section 732(1)(c) as a result of the transfer or operations in question is calculated as follows.

(3)The amount is calculated under section 733(1) as if the total untaxed benefits were reduced by the amount of that income.

(4)In this section “the total untaxed benefits” has the same meaning as in section 733(1) (see Step 2).]

[F27735Non-UK domiciled individuals to whom remittance basis appliesU.K.

[F28(1)This section applies in relation to income treated under section 732 as arising to an individual in a tax year (“the deemed income”) if section 809B, 809D or 809E (remittance basis) applies to the individual for that year.]

(2)For the purposes of this section the deemed income is “foreign” if (and to the extent that) the relevant income to which it relates would be relevant foreign income if it were the individual's.

(3)Treat the foreign deemed income as relevant foreign income of the individual.

(4)For the purposes of Chapter A1 of Part 14 (remittance basis) treat relevant income, or a benefit, that relates to any part of the foreign deemed income as deriving from that part of the foreign deemed income.

[F29(5)In the application of section 832 of ITTOIA 2005 to the foreign deemed income, subsection (2) of that section has effect with the omission of paragraph (b).]

735ASection 735: relevant income and benefits relating to foreign deemed incomeU.K.

(1)For the purposes of section 735—

(a)place the benefits mentioned in Step 1 in the order in which they were received by the individual (starting with the earliest benefit received),

(b)deduct from those benefits so much of any benefit within section 734(1)(b) as gives rise as mentioned in section 734(1)(d) to chargeable gains or offshore income gains,

(c)place the income mentioned in Step 3 for the tax years mentioned in Step 4 (“the relevant income”) in the order determined under subsection (3),

(d)deduct from that income any income that may not be taken into account because of section 743(1) or (2) (no duplication of charges),

(e)place the income treated under section 732(2) as arising to the individual in respect of the benefits in the order in which it is treated as arising (starting with the earliest income treated as having arisen), and

(f)treat the income mentioned in paragraph (e) as related to—

(i)the benefits, and

(ii)the relevant income,

by matching that income with the benefits and the relevant income (in the orders mentioned in paragraphs (a), (c) and (e)).

(2)In subsection (1) references to a step are to a step in section 733(1).

(3)The order referred to in subsection (1)(c) is arrived at by taking the following steps.

Step 1

Find the relevant income for the earliest tax year (of the tax years referred to in subsection (1)(c)).

Step 2

Place so much of that income as is not foreign in the order in which it arose (starting with the earliest income to arise).

Step 3

After that, place so much of that income as is foreign in the order in which it arose (starting with the earliest income to arise).

Step 4

Repeat Steps 1 to 3.

For this purpose, read references to the relevant income for the earliest tax year as references to the relevant income for the first tax year after the last tax year in relation to which those Steps have been undertaken.

(4)For the purposes of subsection (3) relevant income is “foreign” where it would be relevant foreign income if it were the individual's.

(5)For those purposes treat income for a period as arising immediately before the end of the period.

(6)Subsection (1)(d) does not apply if the income may not be taken into account because the individual[F30, or as a result of section 733A another person,] has been charged to income tax under section 731 by reason of the income.]

[F31735BSettlor liable under section 733A and remittance basis appliesU.K.

(1)This section applies in relation to income if—

(a)the income is treated by section 732 as arising to an individual (“the beneficiary”) for a tax year,

(b)another individual (“the settlor”) is under section 733A(2) or (3) liable for tax on the income, and

(c)section 809B, 809D or 809E (remittance basis) applies to the settlor for that year.

(2)The income (“the transferred-liability deemed income”) is treated as relevant foreign income of the settlor.

(3)If, for the purposes of section 735 as it applies in relation to the beneficiary, any benefit or relevant income relates to any part of the transferred-liability deemed income then, for the purposes of Chapter A1 of Part 14 as it applies in relation to the settlor, that benefit or relevant income is to be treated as deriving from that part of the transferred-liability deemed income.

(4)In the application of section 832 of ITTOIA 2005 in relation to the income, subsection (2) of that section has effect with the omission of its paragraph (b).]

[F32735CPerson liable under section 733C or 733E and remittance basis appliesU.K.

(1)This section applies in relation to income if—

(a)the income is treated as arising to an individual for a tax year—

(i)as a result of the operation of section 733C(3) and (4) where section 733C(3) applies because of section 733C(2), or

(ii)as a result of the operation of section 733E, and

(b)section 809B, 809D or 809E (remittance basis) applies to the individual for that year.

(2)The income is treated as relevant foreign income of the individual.

(3)For the purposes of Chapter A1 of Part 14 (remittance basis) treat the onward payment, or (as the case may be) the part of it whose amount or value is equal to the amount of the income, as deriving from the income.

(4)In the application of section 832 of ITTOIA 2005 in relation to the income, subsection (2) of that section has effect with the omission of its paragraph (b).]