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HMRC internal manual

Offshore Funds Manual

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HM Revenue & Customs
Updated
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Investors in non-reporting funds: charge to tax on disposal of an interest: transfer of assets abroad - Regulation 21

Effect of transfer of assets abroad rules on an offshore income gain

When an offshore income gain (OIG) arises to a person resident or domiciled outside the United Kingdom then legislation relating to the transfer of assets abroad applies in relation to that OIG as if the amount were foreign income becoming payable to that person. The relevant legislation is at Chapter 2 Part 13 ITA 2007.

This regulation is subject to two exceptions-

Exception 1 - non resident settlements (regulation 21(4) and (5))

This rule does not apply to an OIG (or a part of an OIG) that arises to the trustees of a non-resident settlement and which is consequently treated as arising to an individual resident or ordinarily resident in the United Kingdom. Instead the rule relating to OIGs arising to non-resident settlements will take precedence (see OFM15600).

Where this exception applies to an OIG (or part of one) then this exception applies in that tax year and any future tax year to the OIG (or part OIG) treated as arising to a person resident or ordinarily resident in the United Kingdom (irrespective of whether or when that treatment leads to a tax charge).

Exception 2- OIG treated as arising to person resident or ordinarily resident (regulation 21(3))

This rule does not apply to an OIG that arises to an offshore company and is, as a result of the rule described at OFM15800, treated as arising to a person resident or ordinarily resident in the UK as a result of the gain.

Amounts carried forward in non-resident settlements

When, as a result of this regulation and Chapter 2 Part 13 ITA, foreign income is treated as arising to a person in a tax year then any OIG amount for a non-resident settlement (see regulation 20(2) and OFM15600) is reduced from the following tax year by the amount of the income.