INTM602840 - Transfer of assets abroad: Exemptions from charge: Avoidance purpose exemption - mixed relevant transactions

Where the relevant transactions include both pre-5 December 2005 and post-4 December 2005 transactions, the conditions for exemption detailed in INTM602780 and INTM602800 are to be applied separately to those transactions according to the period in which they fall.

In other words

  • the conditions in INTM602780 are to be applied to all transactions that are pre-5 December 2005, and
  • the conditions in INTM602800 are to be applied to all transactions that are post-4 December 2005.

If the conditions for exemption in INTM602780 are met in relation to all pre-5 December 2005 transactions and the conditions for exemption in INTM602800 are met in relation to all post-4 December 2005 transactions, then the individual is not liable to tax under the transfer of assets provisions for the tax year by reference to the relevant transactions.

However, if all pre-5 December 2005 transactions satisfy the conditions for exemption in INTM602780 but the conditions for exemption in INTM602800 are not met in relation to post-4 December 2005 transactions (or any of them), then the following modifications operate in applying the transfer of assets provisions:

For the income charge (INTM600540), any income arising before 5 December 2005 must not be brought into account as income of the person abroad.

For the benefits charge (INTM601400):

  • when determining what will be the relevant income of earlier tax years for Step 4 of ITA07/S733(1), it does not matter whether the years were years for which the individual would not have been liable to a benefits charge because of the exemption; the relevant income for such years is also included when calculating the total relevant income
  • for the purpose of Step 1, a benefit received by the individual in or before the tax year 2005-2006 is to be left out of account
  • but in the case of a benefit received in the tax year 2005-2006 the preceding bullet only applies to so much of the benefit as, on a time apportionment basis, fell to be enjoyed in any part of the year that fell before 5 December 2005.

In circumstances where any pre-5 December 2005 transaction caused the exemption test in INTM602780 to be failed, the purpose of any later associated operations post-4 December 2005 will be immaterial to the continuing liability.