Finance Act 1986

58 Gifts into dual resident trusts

(1) This section applies where there is or has been a disposal of an asset to the trustees of a settlement in such circumstances that, on a claim for relief, section 79 of the Finance Act 1980 (general relief for gifts) applies, or would but for this section apply, so as to reduce the amounts of the chargeable gain and the consideration referred to in subsection (1) of that section.

(2) In this section-

(a) "a relevant disposal" means such a disposal as is referred to in subsection (1) above; and

(b) "the 1980 provision" means section 79 of the [1980 c. 48.] Finance Act 1980.

(3) Relief under the 1980 provision shall not be available on a relevant disposal occurring on or after 18th March 1986 if—

(a) at the material time the trustees to whom the disposal is made fall to be treated, under section 52 of the [1979 c. 14.] Capital Gains Tax Act 1979, as resident and ordinarily resident in the United Kingdom, although the general administration of the trust is ordinarily carried on outside the United Kingdom; and

(b) on a notional disposal of the asset concerned occurring immediately after the material time, the trustees would be regarded for the purposes of any double taxation relief arrangements—

(i) as resident in a territory outside the United Kingdom; and

(ii) as not liable in the United Kingdom to tax on a gain arising on that disposal.

(4) In subsection (3) above—

(a) "the material time" means the time of the relevant disposal;

(b) a "notional disposal" means a disposal by the trustees of the asset which was the subject of the relevant disposal; and

(c) "double taxation relief arrangements" means arrangements having effect by virtue of section 497 of the Taxes Act (as extended to capital gains tax by section 10 of the [1979 c. 14.] Capital Gains Tax Act 1979).

(5) In any case where—

(a) relief under the 1980 provision has been allowed on a claim relating to a relevant disposal, (whether occurring before, on or after 18th March 1986), and

(b) at a time subsequent to that relevant disposal, but not earlier than 18th March 1986, the circumstances become such that paragraphs (a) and (b) of subsection (3) above would apply if that time were the material time referred to in that subsection, and

(c) section 79 of the [1981 c. 35.] Finance Act 1981 (which provides for the recovery of relief under the 1980 provision in the event of the emigration of the donee) has not had effect in relation to the relevant disposal before that time and would not (apart from this subsection) have effect at that time,

section 79 of the [1981 c. 35.] Finance Act 1981 shall have effect as if, at that time, the trustees had become neither resident nor ordinarily resident in the United Kingdom.