PART XVII TAX AVOIDANCE

CHAPTER V OFFSHORE FUNDS

Charge to tax of offshore income gains

762 Offshore income gains accruing to persons resident or domiciled abroad.

M11

Section F113 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;

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.

2

Subject to subsections (3) and (4) below, sections F187 to 90 and 96 to 98 of the 1992 Act (gains of non-resident settlements) shall have effect in relation to offshore income gains subject to the following modifications—

a

for any reference to chargeable gains, other than the reference in section F187(6), there shall be substituted a reference to offshore income gains;

b

F1in section 87(2) of the 1992 Act for the words “tax under section 2(2)” there shall be substituted the words “ income tax by virtue of section 761 of the Taxes Act ”;

c

in section F187(7) the reference to tax shall be construed as a reference to income tax or corporation tax; and

d

sections F187(10) and 97(6) shall be omitted.

3

In section F187(6) of the 1992 Act, both as it applies apart from subsection (2) above and as applied by subsection (2) above, the reference to chargeable gains shall be construed as including a reference to offshore income gains.

4

If, in any year of assessment—

a

under subsection (3) of section F187 of the 1992 Act, as it applies apart from subsection (2) above, a chargeable gain falls to be attributed to a beneficiary, and

b

under that subsection, as applied by subsection (2) above, an offshore income gain also falls to be attributed to him,

subsection (4) of that section (gains attributed in proportion to capital payments received) shall have effect as if it required offshore income gains to be attributed before chargeable gains.

5

Subject to subsection (6) below, for the purpose of determining whether an individual ordinarily resident in the United Kingdom has a liability for income tax in respect of an offshore income gain which arises on a disposal to which this Chapter applies where the disposal is made by a person resident or domiciled outside the United Kingdom—

a

F3Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) shall apply as if the offshore income gain arising to the person resident or domiciled outside the United Kingdom constituted income becoming payable to him, and

b

any reference in F4that Chapter to income of (or payable or arising to) such a person accordingly includes a reference to the offshore income gain arising to him by reason of the disposal to which this Chapter applies.

6

To the extent that an offshore income gain is treated, by virtue of subsection (1) or subsection (2) above, as having accrued 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 F5Chapter 2 of Part 13 of ITA 2007 or any provision of F2Chapter 5 of Part 5 of ITTOIA 2005.