Textual Amendments
F1Ss. 756A-756C and preceding cross-headings inserted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 3 (with Sch. 26 para. 17)
(1)In this Chapter references to an offshore fund are to a collective investment scheme constituted by—
(a)a company that is resident outside the United Kingdom, or
(b)a unit trust scheme the trustees of which are not resident in the United Kingdom, or
(c)arrangements not falling within paragraph (a) or (b) taking effect by virtue of the law of a territory outside the United Kingdom and which under that law create rights in the nature of co-ownership (without restricting that expression to its meaning in the law of any part of the United Kingdom).
(2)Subsection (1) has effect subject to—
section 756B (treatment of umbrella funds), and
section 756C (treatment of funds comprising more than one class of interest).
[F2(3)In this section “collective investment scheme” means any arrangements which are a collective investment scheme for the purposes of Part 17 of the Financial Services and Markets Act 2000 (see section 235 of that Act and orders made under subsection (5) of that section) or would be if the words “, within a period appearing to him to be reasonable,” were omitted from section 236(3)(a) of that Act.
(4)But the reference to offshore funds in section 760(3)(a) does not include any arrangements which are not a collective investment scheme for the purposes of that Part of that Act.]
Textual Amendments
F2S. 756A(3)(4) substituted for s. 756A(3) (19.7.2007) by Finance Act 2007 (c. 11), s. 57(2)
Modifications etc. (not altering text)
C1Ss. 756A-756C applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 489 (with Sch. 2 Pts. 1, 2)
(1)In this Chapter, an “umbrella fund” means an offshore fund—
(a)which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are made to them; and
(b)under which the participants are entitled to exchange rights in one pool for rights in another;
and references in this Chapter to a part of an umbrella fund are to such of the arrangements as relate to a separate pool.
(2)For the purposes of this Chapter (except subsection (1))—
(a)each part of an umbrella fund shall be regarded as a separate offshore fund, and
(b)the umbrella fund as a whole shall not be regarded as an offshore fund.
(3)In this Chapter, in relation to a part of an umbrella fund—
(a)a reference to the assets of an offshore fund is to such of the assets of the umbrella fund as under the arrangements form part of the separate pool to which that part of the umbrella fund relates;
(b)a reference to the income of an offshore fund is to the income arising from those assets;
(c)a reference to a person having an interest in an offshore fund is to a person for the time being having an interest in that separate pool; and
(d)a reference to an offshore fund being a non-qualifying fund shall be read in relation to times before the coming into force of this section as a reference to the umbrella fund being a non-qualifying fund.
Modifications etc. (not altering text)
C2Ss. 756A-756C applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 489 (with Sch. 2 Pts. 1, 2)
(1)For the purposes of this Chapter where there is more than one class of interest in an offshore fund (the “main fund”)—
(a)each class of interest shall be regarded as a separate offshore fund, and
(b)the main fund shall not be regarded as an offshore fund.
(2)In this section, references to a class of interest in an offshore fund do not include—
(a)a part of an umbrella fund which is regarded as an offshore fund by virtue of section 756B, or
(b)a class of interest in an offshore fund which by virtue of section 759(5), (6) or (8) is not a material interest in the fund.
(3)In this Chapter, in relation to a class of interest in an offshore fund—
(a)a reference to the assets of an offshore fund is to the assets of the main fund;
(b)a reference to the income of an offshore fund is to such of the income of the main fund as is attributable to interests of that class under the arrangements constituting the main fund;
(c)a reference to a person having an interest in an offshore fund is to a person for the time being having an interest of that class; and
(d)a reference to an offshore fund being a non-qualifying fund shall be read in relation to times before the coming into force of this section as a reference to the main fund being a non-qualifying fund.]
Modifications etc. (not altering text)
C3Ss. 756A-756C applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 489 (with Sch. 2 Pts. 1, 2)
M1(1)This Chapter applies to a disposal by any person of an asset if—
(a)at the time of the disposal, the asset constitutes a material interest in an offshore fund which is or has at any material time been a non-qualifying offshore fund; or
(b)at the time of the disposal, the asset constitutes an interest in a company resident in the United Kingdom or in a unit trust scheme, the trustees of which are at that time resident in the United Kingdom and at a material time after 31st December 1984 [F3the interest was a material interest in a non-qualifying offshore fund];
and for the purpose of determining whether the asset disposed of falls within paragraph (b) above, section [F4127 of the 1992] Act (equation of original shares and new holding) shall have effect as it has effect for the purposes of that Act.
[F5(1A)But this Chapter does not apply to disposals of assets of an insurance company's long-term insurance fund.]
(2)M2Subject to the following provisions of this section and section 758, there is a disposal of an asset for the purposes of this Chapter if there would be such a disposal for the purposes of the [F41992] Act.
(3)Notwithstanding anything in paragraph (b) of subsection (1) of section [F462 of the 1992] Act (general provisions applicable on death: no deemed disposal by the deceased) where a person dies and the assets of which he was competent to dispose include an asset which is or has at any time been a material interest in a non-qualifying offshore fund, then, for the purposes of this Chapter, other than section 758—
(a)immediately before the acquisition referred to in paragraph (a) of that subsection, that interest shall be deemed to be disposed of by the deceased for such a consideration as is mentioned in that subsection; but
(b)nothing in this subsection affects the determination, in accordance with subsection (1) above, of the question whether that deemed disposal is one to which this Chapter applies.
(4)Subject to subsection (3) above, section [F462 of the 1992] Act applies for the purposes of this Chapter as it applies for the purposes of that Act, and the reference in that subsection to the assets of which a deceased person was competent to dispose shall be construed in accordance with subsection (10) of that section.
[F6(5)Section 135 of the 1992 Act (exchange of securities for those in another company treated as not involving a disposal) does not apply for the purposes of this Chapter [F7to the extent that—
(a)the interest in the entity that is company A for the purposes of that section that is exchanged is or was at a material time an interest in a non-qualifying offshore fund, and
(b)the interest in the entity that is company B for those purposes that is exchanged is not an interest in such a fund.]
In a case where that section would apply apart from this subsection, the exchange in question [F8(of interests in or of an entity that are or were at a material time interests in a non-qualifying offshore fund)] shall for the purposes of this Chapter constitute a disposal of interests in the offshore fund for a consideration equal to their market value at the time of the exchange.
(6)Section 136 of the 1992 Act (scheme of reconstruction involving issue of securities treated as exchange not involving disposal) does not apply for the purposes of this Chapter [F9to the extent that—
(a)the interest in the entity that is company A for the purposes of that section that is exchanged is or was at a material time an interest in a non-qualifying offshore fund, and
(b)the interest in the entity that is company B for those purposes that is exchanged is not an interest in such a fund.]
In a case where that section would apply apart from this subsection, the deemed exchange in question [F10(of interests in or of an entity that are or were at a material time interests in a non-qualifying offshore fund)] shall for the purposes of this Chapter constitute a disposal of interests in the offshore fund for a consideration equal to their market value at the time of the deemed exchange.]
(7)For the purposes of this section—
(a)a material time, in relation to the disposal of an asset, is [F11any time on or after] the earliest date on which any relevant consideration was given for the acquisition of the asset or, if that date is earlier than 1st January 1984, any time on or after 1st January 1984; and
(b)“relevant consideration” means consideration which, assuming the application to the disposal of [F4Chapter III of Part II of the 1992] Act, would fall to be taken into account in determining the amount of the gain or loss accruing on the disposal, whether that consideration was given by or on behalf of the person making the disposal or by or on behalf of a predecessor in title of his whose acquisition cost represents, directly or indirectly, the whole or any part of the acquisition cost of the person making the disposal.
Textual Amendments
F3Words in s. 757(1)(b) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 4(2)
F4Words in s. 757(1)-(7) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(43) (with ss. 60, 101(1), 171, 201(3))
F5S. 757(1A) inserted (with effect in accordance with Sch. 17 para. 30(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 17 para. 30(1)
F6S. 757(5)(6) substituted (with effect in accordance with Sch. 9 paras. 7, 8(1) of the amending Act) by Finance Act 2002 (c. 23), Sch. 9 para. 4(5)
F7Words in s. 757(5) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 4(3)(a)
F8Words in s. 757(5) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 4(3)(b)
F9Words in s. 757(6) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 4(4)(a)
F10Words in s. 757(6) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 4(4)(b)
F111990 s.89and Sch.14 para.10 (correction of errors)—deemed always to have had effect.
Modifications etc. (not altering text)
C4S. 757 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 7 (with Sch. 10 para. 10); S.I. 2003/120, art. 2, Sch. (with arts. 3, 4 (as amended by S.I. 2003/333, art. 14))
Marginal Citations
M1Source—1984 s.92(1), (7)
M2Source—1984 s.92(2)-(6), (8)
M3(1)For the purposes of this Chapter, an offshore fund operates equalisation arrangements if, and at a time when, arrangements are in existence which have the result that where—
(a)a person acquires by way of initial purchase a material interest in the fund at some time during a period relevant to the arrangements; and
(b)the fund makes a distribution for a period which begins before the date of his acquisition of that interest;
the amount of that distribution which is paid to him (assuming him still to retain that interest) will include a payment of capital which is debited to an account maintained under the arrangements (“the equalisation account”) and which is determined by reference to the income which had accrued to the fund at the date of his acquisition.
(2)For the purposes of this section, a person acquires an interest in an offshore fund by way of initial purchase if—
(a)his acquisition is by way of subscription for or allotment of new shares, units or other interests issued or created by the fund; or
(b)his acquisition is by way of direct purchase from the persons concerned with the management of the fund and their sale to him is made in their capacity as managers of the fund.
(3)Without prejudice to section 757(1), this Chapter applies, subject to the following provisions of this section, to a disposal by any person of an asset if—
(a)at the time of the disposal, the asset constitutes a material interest in an offshore fund which at that time is operating equalisation arrangements; and
(b)the fund is not and has not at any material time (within the meaning of section 757(7)) been a non-qualifying offshore fund; and
(c)the proceeds of the disposal do not fall to be taken into account as a trading receipt.
(4)This Chapter does not, by virtue of subsection (3) above, apply to a disposal if—
(a)it takes place during such a period as is mentioned in subsection (1)(a) above; and
(b)throughout so much of that period as precedes the disposal, the income of the offshore fund concerned has been of such a nature as is referred to in paragraph 3(1) of Schedule 27.
(5)An event which, apart from section [F12127 of the 1992] Act (reorganisations etc.), would constitute a disposal of an asset shall constitute such a disposal for the purpose of determining whether, by virtue of subsection (3) above, there is a disposal to which this Chapter applies.
(6)The reference in subsection (5) above to section [F12127 of the 1992] Act includes a reference to that section as applied by [F13any provision of Chapter 2 of Part 4 of that Act].
[F14(7)The Treasury may make provision by regulations as to the application of the provisions of this section in relation to—
(a)a part of an umbrella fund which is treated as an offshore fund under section 756B, or
(b)a class of interest in an offshore fund which is treated as an offshore fund under section 756C.
(8)Regulations under subsection (7) may—
(a)make different provision for different cases, and
(b)include such supplementary, incidental, consequential or transitional provisions (including provisions modifying the effect of other enactments) as appear to the Treasury to be necessary or expedient.]
Textual Amendments
F12Words in s. 758(5)(6) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(44) (with ss. 60, 101(1), 171, 201(3))
F13Words in s. 758(6) substituted (with effect in accordance with Sch. 9 paras. 7, 8(3) of the amending Act) by Finance Act 2002 (c. 23), Sch. 9 para. 4(6)
F14S. 758(7)(8) inserted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 5
Modifications etc. (not altering text)
C5S. 758 applied (with modifications) (22.10.2004 with effect in accordance with reg. 1(2) of the affecting S.I.) by The Offshore Funds Regulations 2004 (S.I. 2004/2572), regs. 1(1), 3
Marginal Citations
M3Source—1984 s.93
M4(1)F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F16(1A)F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]
(2)Subject to the following provisions of this section, a person’s interest in [F17an offshore fund] is a material interest if, at the time when he acquired the interest, it could reasonably be expected that, at some time during the period of seven years beginning at the time of his acquisition, he would be able to realise the value of the interest (whether by transfer, surrender or in any other manner).
(3)For the purposes of subsection (2) above, a person is at any time able to realise the value of an interest if at that time he can realise an amount which is reasonably approximate to that portion which the interest represents (directly or indirectly) of the market value at that time of [F18the assets of the fund].
(4)For the purposes of subsections (2) and (3) above—
(a)a person is able to realise a particular amount if he is able to obtain that amount either in money or in the form of assets to the value of that amount; and
(b)if at any time an interest in an offshore fund has a market value which is substantially greater than the portion which the interest represents, as mentioned in subsection (3) above, of the market value at that time of the assets concerned, the ability to realise such a market value of the interest shall not be regarded as an ability to realise such an amount as is referred to in that subsection.
(5)An interest in [F19an offshore fund] is not a material interest if—
(a)it is an interest in respect of any loan capital or debt issued or incurred for money which, in the ordinary course of a business of banking, is lent by a person carrying on that business; or
(b)it is a right arising under a policy of insurance.
(6)Shares in a company [F20that is not resident in the United Kingdom](an “overseas company”) do not constitute a material interest [F21in an offshore fund] if—
(a)the shares are held by a company and the holding of them is necessary or desirable for the maintenance and development of a trade carried on by the company or a company associated with it; and
(b)the shares confer at least 10 per cent. of the total voting rights in the overseas company and a right, in the event of a winding-up, to at least 10 per cent. of the assets of that company remaining after the discharge of all liabilities having priority over the shares; and
(c)not more than ten persons hold shares in the overseas company and all the shares in that company confer both voting rights and a right to participate in the assets on a winding-up; and
(d)at the time of its acquisition of the shares, the company had such a reasonable expectation as is referred to in subsection (2) above by reason only of the existence of—
(i)an arrangement under which, at some time within the period of seven years beginning at the time of acquisition, that company may require the other participators to purchase its shares; or
(ii)provisions of either an agreement between the participators or the constitution of the overseas company under which the company will be wound up within a period which is, or is reasonably expected to be, shorter than the period referred to in subsection (2) above; or
(iii)both such an arrangement and such provisions;
and in this paragraph “participators” means the persons holding shares falling within paragraph (c) above.
(7)For the purposes of subsection (6)(a) above, a company is associated with another company if one of them has control of the other within the meaning of section 416 or both of them are under the control, within the meaning of that section, of the same person or persons.
(8)An interest in a company [F20that is not resident in the United Kingdom] is not a material interest [F21in an offshore fund] at any time when the following conditions are satisfied, namely—
(a)that the holder of the interest has the right to have the company wound up; and
(b)that, in the event of a winding up, the holder is, by virtue of the interest and any other interest which he then holds in the same capacity, entitled to more than 50 per cent. of the assets remaining after the discharge of all liabilities having priority over the interest or interests concerned.
(9)The market value of any asset for the purposes of this Chapter shall be determined in like manner as it would be determined for the purposes of the [F221992] Act except that, in the case of an interest in an offshore fund for which there are separate published buying and selling prices, section [F22272(5)] of that Act (meaning of “market value” in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this Chapter.
Textual Amendments
F15S. 759(1)(1A) repealed (with effect in accordance with s. 145(2) of the repealing Act) by Finance Act 2004 (c. 12), Sch. 26 para. 6(2), Sch. 42 Pt. 2(18), Note 1 (with Sch. 26 para. 17)
F16S. 759(1A) inserted (with application in accordance with s. 134(8) of the amending Act) by Finance Act 1995 (c. 4), s. 134(3)
F17Words in s. 759(2) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 6(3) (with Sch. 26 para. 17)
F18Words in s. 759(3) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 6(4) (with Sch. 26 para. 17)
F19Words in s. 759(5) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 6(5) (with Sch. 26 para. 17)
F20Words in s. 759(6)(8) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 6(6)(a) (with Sch. 26 para. 17)
F21Words in s. 759(6)(8) inserted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 6(6)(b) (with Sch. 26 para. 17)
F22Words in s. 759(9) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(45) (with ss. 60, 101(1), 171, 201(3))
Marginal Citations
M4Source—1984 s.94
M5(1)For the purposes of this Chapter, an offshore fund is a non-qualifying fund except during an account period of the fund in respect of which the fund is certified by the Board as a distributing fund.
(2)An offshore fund shall not be certified as a distributing fund in respect of any account period unless, with respect to that period, the fund pursues a full distribution policy, within the meaning of Part I of Schedule 27.
(3)Subject to Part II of that Schedule, an offshore fund shall not be certified as a distributing fund in respect of any account period if, at any time in that period—
(a)more than 5 per cent. by value of the assets of the fund consists of interests in other offshore funds; F23. . .
(b)F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)For the purposes of this Chapter, an account period of an offshore fund shall begin—
(a)whenever the fund begins to carry on its activities; and
(b)whenever an account period of the fund ends without the fund then ceasing to carry on its activities.
(9)For the purposes of this Chapter, an account period of an offshore fund shall end on the first occurrence of any of the following—
(a)the expiration of 12 months from the beginning of the period;
(b)an accounting date of the fund or, if there is a period for which the fund does not make up accounts, the end of that period; and
(c)the fund ceasing to carry on its activities.
(10)For the purposes of this Chapter—
(a)an account period of an offshore fund which is a company [F25that is not resident in the United Kingdom] shall end if, and at the time when, the company ceases to be resident outside the United Kingdom; and
(b)an account period of an offshore fund which is a unit trust scheme [F26of which the trustees are not resident in the United Kingdom] shall end if, and at the time when, the trustees of the scheme become resident in the United Kingdom.
[F27(10A)For the purposes of this Chapter, in relation to—
(a)a part of an umbrella fund which is treated as an offshore fund under section 756B, or
(b)a class of interest in an offshore fund which is treated as an offshore fund under section 756C,
references to an account period of the offshore fund are to an account period of the umbrella fund or the main fund (as the case may be).]
(11)The provisions of Part III of Schedule 27 shall have effect with respect to the procedure for and in connection with the certification of an offshore fund as a distributing fund, and the supplementary provisions in Part IV of that Schedule shall have effect.
Textual Amendments
F23S. 760(3)(b)-(d) and preceding word repealed (with effect in accordance with s. 145(2) of the repealing Act) by Finance Act 2004 (c. 12), Sch. 26 para. 13(2), Sch. 42 Pt. 2(18), Note 1 (with Sch. 26 para. 17)
F24S. 760(4)-(7) repealed (with effect in accordance with s. 145(2) of the repealing Act) by Finance Act 2004 (c. 12), Sch. 26 para. 13(3), Sch. 42 Pt. 2(18), Note 1 (with Sch. 26 para. 17)
F25Words in s. 760(10)(a) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 7(2)(a) (with Sch. 26 para. 17)
F26Words in s. 760(10)(b) substituted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 7(2)(b) (with Sch. 26 para. 17)
F27S. 760(10A) inserted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 7(3) (with Sch. 26 para. 17)
Modifications etc. (not altering text)
C6S. 760 modified (22.7.2004) by Finance Act 2004 (c. 12), Sch. 26 para. 17
Marginal Citations
M5Source—1984 s.95
M6(1)If a disposal to which this Chapter applies gives rise in accordance with section 758 [F28or Schedule] 28 to an offshore income gain, then, subject to the provisions of this section, the amount [F29of that gain—
(a)shall be treated for all the purposes of the Tax Acts as income arising at the time of the disposal to the person making the disposal, and
(b)shall be charged—
(i)to income tax for the year of assessment in which the disposal is made, or
(ii)to corporation tax [F30, under the charge to corporation tax on income,] for the accounting period in which the disposal is made.]
[F31(1A)The income tax charged by virtue of subsection (1)(b)(i) above shall be charged on the full amount of the income treated as arising in the year of assessment.]
(2)Subject to subsection (3) below, [F32sections 2(1), 10 and 10B][F33of the 1992 Act] (persons chargeable to tax in respect of chargeable gains) and [F34section 19(3)(c) of CTA 2009] shall have effect in relation to income tax or corporation tax in respect of offshore income gains as they have effect in relation to capital gains tax or corporation tax in respect of chargeable gains.
(3)In the application of [F35sections 10 and 10B][F33of the 1992 Act] in accordance with subsection (2) above, paragraphs (a) and (b) of [F36subsection (1) of section 10] (which define the assets on the disposal of which chargeable gains are taxable) shall have effect with the omission of the words “situated in the United Kingdom and”[F37 and paragraphs (a) and (b) of subsection (1) of section 10B (which make similar provision in relation to corporation tax) shall have effect with the omission of the words “situated in the United Kingdom and”].
F38(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F39(5)Subsections (1)(b) and (1A) are subject to section 762ZB (income treated as arising: non-UK domiciled individuals to whom remittance basis applies).]
(6)A [F40charitable company] shall be exempt from [F41corporation tax] in respect of an offshore income gain if the gain is applicable and applied for charitable purposes F42. . . .
[F43(6A)See section 535 of ITA 2007 for an exemption for income tax purposes for offshore income gains accruing to a charitable trust.
(6B)If property held on charitable trusts ceases to be subject to charitable trusts and that property represents directly or indirectly an offshore income gain, the trustees shall be treated as if they had disposed of and immediately reacquired that property for a consideration equal to its market value, any gain (calculated in accordance with Schedule 28) accruing being treated as an offshore income gain not accruing to a charity.
(6C)In this section “charity” and “charitable company” have the same meaning as in section 506 and “market value” has the same meaning as in the 1992 Act.]
(7)In any case where—
(a)a disposal to which this Chapter applies is a disposal of settled property, within the meaning of the [F331992] Act, and
[F44(b)at the time of the disposal referred to in paragraph (a) above the trustees of the settlement are neither resident nor ordinarily resident in the United Kingdom for the purposes of the 1992 Act,]
subsection (1) above shall not apply in relation to any offshore income gain to which the disposal gives rise.
[F45(8)Nothing in subsection (7) affects the application of this section in relation to an offshore income gain treated as arising by virtue of section 762(3).]
Textual Amendments
F281990 s.89and Sch.14 para.11 (correction of errors)—deemed always to have had effect. Previously
“and Schedule.”
F29Words in s. 761(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 308(2) (with Sch. 2)
F30Words in s. 761(1)(b)(ii) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 220(2) (with Sch. 2 Pts. 1, 2)
F31S. 761(1A) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 308(3) (with Sch. 2)
F32Words in s. 761(2) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(a)(i)
F33Words in s. 761(2)(3)(5)(6)(7)(a)(b) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(47) (with ss. 60, 101(1), 171, 201(3))
F34Words in s. 761(2) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 220(3) (with Sch. 2 Pts. 1, 2)
F35Words in s. 761(3) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(b)(i)
F36Words in s. 761(3) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(b)(ii)
F37Words in s. 761(3) substituted (20.7.2005) by Finance (No. 2) Act 2005 (c. 22), s. 23(1)(b)(iii)
F38S. 761(4) repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with ss. 60, 101(1), 171, 201(3), Sch. 11 paras. 22, 26(2), 27)
F39S. 761(5) substituted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 92(2)
F40Words in s. 761(6) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(2)(a) (with Sch. 2)
F41Words in s. 761(6) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(2)(b) (with Sch. 2)
F42Words in s. 761(6) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(2)(c), Sch. 3 Pt. 1 (with Sch. 2)
F43S. 761(6A)-(6C) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 179(3) (with Sch. 2)
F44S. 761(7)(b) substituted (with effect in accordance with Sch. 12 para. 47(2) of the amending Act) by Finance Act 2006 (c. 25), Sch. 12 para. 47(1)
F45S. 761(8) inserted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 92(3)
Marginal Citations
M6Source—1984 s.96; 1987 Sch.15 16(1)
M7(1)Section [F4613 of the 1992 Act] (chargeable gains accruing to certain non-resident companies) shall have effect in relation to offshore income gains subject to the following modifications—
(a)for any reference to a chargeable gain there shall be substituted a reference to an offshore income gain;
[F47(aa)any reference to anything accruing is to be read as a reference to it arising (and similar references are to be read accordingly);]
(b)for the reference in subsection (7) to capital gains tax there shall be substituted a reference to income tax or corporation tax; and
(c)paragraphs (b) and (c) of subsection (5) and subsection (8) shall be omitted.
[F48(2)If—
(a)offshore income gains arise to the trustees of a settlement in a tax year, and
(b)section 87 of the 1992 Act (gains of non-resident settlements) applies to the settlement for that year,
the OIG amount for the settlement for that year is the amount of the offshore income gains.
(3)Sections 87, 87A, 87C to 90 and 96 to 98 of, and Schedule 4C to, the 1992 Act apply in relation to OIG amounts as if—
(a)references to section 2(2) amounts (except those in paragraph 7B(2)(b) and (4) of Schedule 4C) were to OIG amounts,
(b)references to chargeable gains (except the one in paragraph 1(5) of Schedule 4C) were to offshore income gains,
(c)references to anything accruing were to it arising (and similar references, except the one in paragraph 1(5) of Schedule 4C, were read accordingly), and
(d)sections 87(4), 88(2) to (5), 89(4) and 97(6) and paragraphs 1(3A), 3 to 7, 8AA, 12 and 13 of Schedule 4C were omitted.
(4)Section 87A of the 1992 Act applies for a tax year by virtue of subsection (3) before it applies for that year otherwise than by virtue of that subsection.
(5)If, by virtue of subsection (1) or (3), offshore income gains are treated as arising to a person, for the purposes of section 761 as it applies in relation to the offshore income gains treat the person as having made the disposal in question.]
(6)To the extent that an offshore income gain is treated, by virtue of subsection (1) or [F49(3)], as having [F50arisen] to any person resident or ordinarily resident in the United Kingdom, that gain shall not be deemed to be the income of any individual for the purposes of F51. . . any provision of [F52Chapter 5 of Part 5 of ITTOIA 2005].
Textual Amendments
F46Words in s. 762(1)-(4) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(48) (with ss. 60, 101(1), 171, 201(3))
F47S. 762(1)(aa) inserted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 93(2)
F48S. 762(2)-(5) substituted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 93(3)
F49Word in s. 762(6) substituted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 93(4)(a)
F50Word in s. 762(6) substituted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 93(4)(b)
F51Words in s. 762(6) omitted (with effect in accordance with Sch. 7 para. 98 of the repealing Act) by virtue of Finance Act 2008 (c. 9), Sch. 7 para. 93(4)(c)
F52Words in s. 762(6) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 309(b) (with Sch. 2)
Marginal Citations
M7Source—1984 s.97
(1)Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) applies in relation to an offshore income gain arising to a person resident or domiciled outside the United Kingdom as if the offshore income gain were income becoming payable to the person.
(2)Income treated as arising under that Chapter by virtue of subsection (1) is regarded as “foreign” for the purposes of section 726, 730 or 735 of that Act.
(3)Subsection (1) does not apply in relation to an offshore income gain if (and to the extent that) it is treated, by virtue of section 762(1), as arising to a person resident or ordinarily resident in the United Kingdom.
(4)The following provisions apply if section 762(2) applies in relation to an offshore income gain (“the relevant offshore income gain”).
(5)If—
(a)by virtue of section 762(3) an offshore income gain is treated as arising in a tax year to a person resident or ordinarily resident in the United Kingdom, and
(b)it is so treated by reason of the relevant offshore income gain (or part of it),
for that and subsequent tax years subsection (1) does not apply in relation to the relevant offshore income gain (or that part).
(6)If, by virtue of subsection (1) as it applies in relation to the relevant offshore income gain, income is treated under Chapter 2 of Part 13 of ITA 2007 as arising in a tax year, reduce (with effect from the following tax year) the OIG amount in question by the amount of the income.]
Textual Amendments
F53Ss. 762ZA, 762ZB inserted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 94
(1)This section applies to income treated as arising under section 761(1) to an individual in a tax year if—
(a)section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for that year, and
(b)the individual is not domiciled in the United Kingdom in that year.
(2)Treat the income as relevant foreign income of the individual.
(3)For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis)—
(a)treat any consideration obtained on the disposal of the asset as deriving from the income, and
(b)unless the consideration so obtained is of an amount equal to the market value of the asset, treat the asset as deriving from the income.
(4)In subsection (3)—
(a)“the asset” means the asset the disposal of which causes the income to be treated as arising, and
(b)“the disposal” means the disposal mentioned in paragraph (a).]
Textual Amendments
F53Ss. 762ZA, 762ZB inserted (with effect in accordance with Sch. 7 para. 98 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 94
(1)This section applies where—
(a)classes of interest in an offshore fund (the “main fund”) are treated as separate offshore funds under section 756C; and
(b)as the result of—
(i)a reorganisation within the meaning of section 126 of the 1992 Act, or
(ii)a conversion of securities within the meaning of section 132 of that Act,
a person exchanges an interest of one class (A) in the main fund for an interest of another class (B) in that fund.
(2)Where—
(a)the interest of class A—
(i)is at the time of the exchange an interest in a non-qualifying offshore fund, or
(ii)has been an interest in such a fund at any material time, and
(b)the interest of class B is at the time of the exchange an interest in a fund which is certified by the Board as a distributing offshore fund,
section 127 of the 1992 Act (equation of original shares and new holding) shall not prevent the exchange constituting a disposal for the purposes of this Chapter.
(3)Any such disposal shall be treated as a disposal for a consideration equal to the market value of the rights at the time of the exchange.
(4)In this section—
“class of interest” has the same meaning as in section 756C(1);
“material time” has the same meaning as in section 757.]
Textual Amendments
F54S. 762A inserted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 15(1) (with Sch. 26 para. 17)
M8(1)The provisions of this section apply where a disposal to which this Chapter applies gives rise to an offshore income gain; and, if that disposal also constitutes the disposal of the interest concerned for the purposes of the [F551992] Act, then that disposal is in the following provisions of this section referred to as [F55the 1992 Act disposal].
(2)So far as relates to an offshore income gain which arises on a material disposal (within the meaning of Part I of Schedule 28), subsections (3) and (4) below shall have effect in relation to [F55the 1992 Act disposal] in substitution for section [F5537(1)] of that Act (deduction of consideration chargeable to tax on income).
(3)Subject to the following provisions of this section, in the [F55computation of the gain] accruing on [F55the 1992 Act disposal], a sum equal to the offshore income gain shall be deducted from the sum which would otherwise constitute the amount or value of the consideration for the disposal.
(4)Where [F55the 1992 Act disposal] is of such a nature that, by virtue of section [F5542] of that Act (part disposals) an apportionment falls to be made of certain expenditure, no deduction shall be made by virtue of subsection (3) above in determining, for the purposes of the fraction in subsection (2) of that section, the amount or value of the consideration for the disposal.
(5)If [F55the 1992 Act disposal] forms part of a transfer to which section [F55162] of that Act applies (roll-over relief on transfer of business in exchange wholly or partly for shares) then, for the purposes of subsection (4) of that section (determination of the amount of the deduction from the gain on the old assets) “B” in the fraction in that subsection (the value of the whole of the consideration received by the transferor in exchange for the business) shall be taken to be what it would be if the value of the consideration other than shares so received by the transferor were reduced by a sum equal to the offshore income gain.
(6)Where the disposal to which this Chapter applies constitutes such a disposal by virtue of [F56section 757(5) or (6)] or 758(5), the [F551992] Act shall have effect as if an amount equal to the offshore income gain to which the disposal gives rise were given (by the person making the exchange concerned) as consideration for the new holding, within the meaning of section [F55128] of that Act (consideration given or received for new holding on a reorganisation).
[F57(6A)Where the disposal to which this Chapter applies constitutes such a disposal by virtue of section 762A (exchange of interests of different classes), the 1992 Act shall have effect as if an amount equal to the offshore income gain to which that disposal gives rise were given (by the person making the exchange) as consideration for the new holding (within the meaning of section 128 of that Act (consideration given or received for new holding on a reorganisation)).]
(7)In any case where—
(a)a disposal to which this Chapter applies by virtue of subsection (3) of section 758 is made otherwise than to the offshore fund concerned or the persons referred to in subsection (2)(b) of that section; and
(b)subsequently, a distribution which is referable to the asset disposed of is paid either to the person who made the disposal or to a person connected with him; and
(c)the disposal gives rise (in accordance with Part II of Schedule 28) to an offshore income gain;
then, for the purposes of the Tax Acts, the amount of the first distribution falling within paragraph (b) above shall be taken to be reduced or, as the case may be, extinguished by deducting therefrom an amount equal to the offshore income gain referred to in paragraph (c) above and, if that amount exceeds the amount of that first distribution, the balance shall be set against the second and, where necessary, any later distribution falling within paragraph (b) above, until the balance is exhausted.
[F58(8)For the purposes of subsection (7)(b) above, whether the person who made the disposal is connected with another person is determined in accordance with section 839.]
Textual Amendments
F55Words in s. 763(1)-(6) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(49) (with ss. 60, 101(1), 171, 201(3))
F56Words in s. 763(6) substituted (with retrospective effect in accordance with Sch. 26 para. 16(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 16(1) (with Sch. 26 para. 17)
F57S. 763(6A) inserted (with effect in accordance with s. 145(2) of the amending Act) by Finance Act 2004 (c. 12), Sch. 26 para. 15(2) (with Sch. 26 para. 17)
F58S. 763(8) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 181 (with Sch. 2)
Marginal Citations
M8Source—1984 s.98
F59. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F59S. 764 repealed (6.4.2006) by Finance Act 2006 (c. 25), Sch. 13 paras. 23, 27(1), Sch. 26 Pt. 3(15), Note