INTM602360 - Transfer of assets abroad: Other general provisions: No duplication of charges

Where anti-avoidance legislation is concerned, the UK courts have not been surprised by the fact that more than one provision may apply for taxation in respect of the same income. For example, Lord Steyn in the McGuckian case (69 TC 1) comments in the context of the transfer of assets provisions,

that the revenue authorities should have overlapping taxation powers is an unremarkable consequence.

It is certainly true that there are instances where income, to which the transfer of assets provisions potentially applies, is also potentially chargeable under some other charging provision.

The transfer of assets legislation does provide rules to prevent some specific instances of potential duplication of charge, and in relation to certain situations HMRC and the courts have provided guidance where legislation does not. Where income can be fully assessed under the transfer of assets legislation and also under the Settlements Legislation in Chapter 5, Part 5 ITTIOA 2005, it will not in practice be chargeable under both. In such circumstances HMRC will charge the income to tax under the Settlements Legislation. In the case of Regina v Dimsey (74 TC 263) Lord Scott noted that HMRC gave the following commitment:

In the course of the hearing before your Lordships Mr Milne QC, counsel for the Revenue, gave an assurance on behalf of his clients that in seeking to recover income tax against a transferor under section 739(2) credit would always be given for any tax that had been paid on the same income by the transferee and vice versa, but as Lord Wilberforce remarked in Inland Revenue Commissioners v Garvin [1981] 1 WLR 793, at page 799; (1981) 55 TC 24, at page 8, the avoidance of double taxation ‘should be a right and not merely a privilege.’

In order to legislate for situations of potential double taxation not already covered by the existing legislation, the Finance Act of 2013 introduced further changes. These are discussed at INTM602460.