Transfer of assets abroad code—motive defence
Produced in partnership with James Quarmby of Stephenson Harwood

The following Private Client practice note produced in partnership with James Quarmby of Stephenson Harwood provides comprehensive and up to date legal information covering:

  • Transfer of assets abroad code—motive defence
  • Statutory conditions
  • ITA 2007, s 737—post-4 December 2005 transactions
  • ITA 2007, s 739—pre-5 December 2005 Transactions
  • Relevant transactions include both pre-5 December 2005 and post-4 December 2005 transactions—ITA 2007, s 740
  • Partial exemption where later associated operations fail—ITA 2007, ss 741–742
  • Analysis of meaning of ‘avoiding liability to taxation’
  • Transfer and associated operations
  • Meaning of the 'purpose' of a relevant transaction
  • Pre-5 December 2005 and post-4 December 2005 transactions
  • More...

Transfer of assets abroad code—motive defence

Part 13, Chapter 2 of the Income Tax Act 2007 (ITA 2007) contains key UK anti-avoidance provisions known as the transfer of assets abroad code (TAA Code). The TAA Code imposes a charge to income tax where there is a 'relevant transaction' in three situations.

First, there is a charge on individuals to whom income is treated as arising under ITA 2007, s 721—those with power to enjoy income (see Practice Note: Transfer of assets abroad—transferors having the power to enjoy income). Secondly, there is a charge on individuals to whom income is treated as arising under ITA 2007, s 728—those receiving capital sums (see Practice Note: Transfer of assets abroad—transferors receiving capital sums). Both of these charges are known as the 'transferor charge'.

Thirdly, there is a charge on individuals to whom income is treated as arising under ITA 2007, s 732. The third charge is known as the 'benefits charge' and applies to individuals who receive benefits from offshore entities, for example beneficiaries under a trust (see Practice Note: Transfer of assets abroad—the benefits charge). Prior to changes introduced by Finance (No 2) Act 2017 and Finance Act 2018, this was a charge only on ‘non-transferors’, but now covers transferors too—see Practice Note: Transfer of assets abroad—the benefits charge for more information.

A ‘relevant transaction’ is a transaction if it

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