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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Migration and exit charges: exit charge for settlements

TCGA92/S80 & TCGA92/S83

The residence status of a body of trustees of a settlement is determined by rules set out in TCGA92/S69, see CG33370+. This status can be changed by changing the persons who are actually trustees. So if trustees who are resident in the UK resign and are replaced by trustees who are not resident in the UK the trust will change from being UK resident to being non-resident. It is also possible for the trustees to be treated as resident elsewhere under the terms of the legislation of another country even though they are regarded as resident here. If so the trustees are then dual resident and may also be treaty non-resident.

To counter the opportunities for avoidance an occasion of charge is imposed by TCGA92/S80 if the trustees of a settlement become not resident in the UK. The occasion of charge occurs immediately before the trustees cease to be resident. Subject to exclusions for assets related to any trade that the trustees continue to carry on in the UK through a branch or agency, the trustees are deemed to have disposed of, and immediately reacquired the chargeable assets of the settlement at market value at that time, see CG38215.

A similar occasion of charge may be imposed by TCGA92/S83 if the trustees become treaty non-resident; that is the trustees become dual resident but taxing rights are given to another country under a double taxation agreement. Again, see CG38215 for details.

All cases where the occasions of charge referred to above may apply must be reported to Specialist PT Trusts and Estates under CG38400+.