Call for evidence outcome

Personal Tax Offshore Anti-Avoidance Legislation Call for Evidence: Summary of responses

Updated 21 July 2025

1. Executive summary

The call for evidence sought to understand and identify areas where the personal tax offshore anti-avoidance rules could be improved or updated. It ran between 30 October 2024 and 19 February 2025 and received 10 responses from representative bodies, law and accountancy firms and wider interested parties who have practical insight on these areas.

Respondents were of the view that the government should take a considered approach towards change and engage extensively with experts in this field of taxation through further consultation before committing to specific revisions to legislation. All respondents offered to engage further with HMRC and HM Treasury.

The government thanks all respondents for the input they provided. The government is committed to improving the operation of rules in this area and acknowledges that revisions to legislation will benefit from further engagement with experts in this field.

The government will consider how best to engage with relevant experts in shaping and taking forward further consultation in this area and provide an update in the Autumn. Any changes to legislation are not expected to be in place before the 2027 to 2028 tax year, at the earliest.

2. Introduction

Background

In the call for evidence, the government set out that it intends to explore options to modernise the offshore personal tax offshore anti-avoidance rules to remove ambiguity and uncertainty in the legislation, make the rules simpler to apply in practice and ensure these anti-avoidance provisions are effective.

The scope of the call for evidence covered personal tax offshore anti-avoidance legislation, including the Transfer of Assets Abroad (TOAA), Settlements, and Capital Gains Tax (CGT), and sought views on how to modernise the rules and ensure they continue to be fit for purpose.

About the responses

The call for evidence ran for 16 weeks. The following 5 questions were asked:

• Question 1: What could be done to simplify this legislation?
• Question 2: What could be done to remove inconsistencies and align this legislation?
• Question 3: What are your views on how the motive defence tests are applied and what areas of these tests could be improved?
• Question 4: Do you have any suggestions on how the government should approach personal tax offshore anti-avoidance legislation in these areas going forward?
• Question 5: Are there any other personal tax offshore anti-avoidance provisions the government should consider as part of the consultation?

3. Responses

Respondents all agreed the need for anti-avoidance legislation to be in place and effective, but also that the existing ‘patchwork’ of rules were no longer reflective of the modern world. The lack of certainty created by the present rules was felt to be a disadvantage to both taxpayers and HMRC.

Question 1: What could be done to simplify this legislation?

Respondents highlighted that alignment is needed between the Settlements legislation, the TOAA provisions, and the CGT provisions to simplify the application of the rules, improve certainty for taxpayers, and provide clearer scope.

Some suggested this could be achieved by introducing clearer tests, perhaps with more clearly defined ‘gateway’ rules placing certain structures in or out of scope and changing existing definitions to remove ambiguity and overlaps. Others favoured a more fundamental, holistic and ground up reform towards a single tax code for personal tax offshore anti-avoidance with consistent definitions, scope, and a clear purpose.

Question 2: What could be done to remove inconsistencies and align this legislation?

Respondents pointed to a range of inconsistencies and overlaps which should be addressed. As mentioned above, respondents queried whether this could be achieved through small isolated changes or if a more fundamental redrafting of the rules would be required.

Suggested areas for alignment and simplification included:

• rules to ensure the same income or gain isn’t being ‘taxed twice’
• definitions of settlor-interested, close family member attribution and onward gift rules
• treatment of income and capital losses
• rules which govern the taxation of benefits or payments received from a structure
• the motive defence applicable for TOAA and the approach taken for CGT
• divergence between the treatment of onshore and offshore trusts
• application of rules to ‘layered’ structures and the difference of approaches taken between companies and trusts

Respondents also highlighted that in considering changes the practical experience of the taxpayers should be borne in mind and the commercial consequence of outcomes created.

An underpinning clarity of purpose from the government of the types of behaviours, transactions and operations the rules are seeking to capture is desired. Some respondents suggested that the scope of chargeability to tax should be considered as part of the consultation, noting that placing tax liability onto a UK resident who may no longer have any connection to an offshore structure should be a last rather than first resort.

Question 3: What are your views on how the motive defence tests are applied and what areas of these tests could be improved?

Respondents highlighted that the differing and subjective nature of motive or purpose tests creates inherent uncertainty and complexity. Moving towards a more objective, simpler and holistic approach which is easy for a taxpayer to evidence was suggested across responses.

Specific issues highlighted with the current rules included:

• difficulty in quantifying income, for example, in circumstances where a taxpayer has a trading company overseas
• obtaining the information required and then overlaying UK tax rules, definitions and differing tax years to perform calculations is often challenging
• lack of clarity on what to disclose to HMRC and how, in order to gain certainty and avoid unnecessary future dispute
• unclear definition for Condition B of the TOAA motive defence, creating a lack of certainty for taxpayers on the meaning of ‘genuine commercial transactions’
• the requirement to consider transactions which may have occurred decades or more in the past and in some cases without the involvement of the potentially liable taxpayer
• multiple ‘cliff edges’ within the legislation that can create disproportionate and ‘dry’ tax charges
• application of differing sets of rules, due to historic transitional provisions, which mean different rules are dependent on transaction timing

Respondents made suggestions including moving to a more objective test, that complexity could be reduced, and the need for motive-based tests could potentially be removed if a more fundamental review of the personal tax offshore anti-avoidance rules was taken forward.

Question 4: Do you have any suggestions on how the government should approach personal tax offshore anti-avoidance legislation in these areas going forward?

Respondents referenced their earlier answers and across responses there was agreement that the government should fundamentally review the core purpose of this area of taxation and set out what it is intending to achieve through the existence of personal tax offshore anti-avoidance rules. Some argued that framing this area as ‘anti-avoidance’ was unhelpful as it placed an artificial constraint on the breadth of improvement and scale of simplification to the taxation of offshore structures which could be achieved, if a ‘blank slate’ exercise was undertaken.

Respondents shared a strong consensus that the government should take a considered approach towards change and engage with experts in this field of taxation through further consultation before committing to specific revisions to legislation. All respondents offered to engage further with HMRC and HM Treasury on this subject. Respondents cited examples such as historic reviews of tax residence for individuals and Controlled Foreign Company rules, where the government had involved experts over a period of time and the outcome was significant simplification of longstanding areas of complexity and ambiguity.

It was noted that due to the recent reforms to the taxation of non-domiciled taxpayers, any further consultation should specifically consider the practical impacts of these rules for taxpayers who from 6 April 2025, make a foreign income and gains claim in their first 4 years of UK residence.

Question 5: Are there any other personal tax offshore anti-avoidance provisions the government should consider as part of the consultation?

Respondents highlighted a range of linked areas of UK tax law which they felt should be considered for inclusion. These areas included:

• section 91 and schedules 4B and 4C of the Taxation Chargeable Gains Act 1992
• the tax treatment of personal portfolio bonds
• the tax treatment of offshore funds, non-reporting funds and offshore income gains rules
• overlap with profit fragmentation rules

4. Government response and next steps

The government is grateful to all those who responded to the call for evidence. The responses indicated a clear desire to work with government on simplifying the personal tax offshore anti-avoidance rules.

The government will consider further how best to engage with relevant experts in shaping and taking forward further consultation in this area and provide an update at the Autumn Budget 2025. Any changes to legislation that form part of this consultation are not expected to take effect before the 2027 to 2028 tax year, at the earliest.

Annex: List of stakeholders consulted

Responses were received from these companies, organisations and representative bodies:

• Deloitte
• KPMG
• Moore Kingston Smith
• PWC
• RSM
• Saffery
• The Centre for the Analysis of Taxation (CenTax) 
• The Chartered Institute of Taxation (CIOT)
• The Institute of Chartered Accountants in England and Wales (ICAEW)
• The Society of Trust and Estate Practitioners (STEP)