SCHEDULES

SCHEDULE 5 Attribution of gains to settlors with interest in non-resident or dual resident settlement

Qualifying settlements, and commencement

9

(1)

A settlement created on or after 19th March 1991 is a qualifying settlement for the purposes of section 86 and this Schedule in—

(a)

the year of assessment in which it is created, and

(b)

subsequent years of assessment.

F1(1A)

Subject to sub-paragraph (1B) below, a settlement created before 19th March 1991 is a qualifying settlement for the purposes of section 86 and this Schedule in—

(a)

the year 1999-00, and

(b)

subsequent years of assessment.

(1B)

Where a settlement created before 19th March 1991 is a protected settlement immediately after the beginning of 6th April 1999, that settlement shall be treated as a qualifying settlement for the purposes of section 86 and this Schedule in a year of assessment mentioned in sub-paragraph (1A)(a) or (b) above only if—

(a)

any of the five conditions set out in subsections (3) to (6A) below becomes fulfilled as regards the settlement in that year; or

(b)

any of those five conditions became so fulfilled in any previous year of assessment ending after 19th March 1991.

F2(2)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

The first condition is that on or after 19th March 1991 property or income is provided directly or indirectly for the purposes of the settlement—

(a)

otherwise than under a transaction entered into at arm’s length, and

(b)

otherwise than in pursuance of a liability incurred by any person before that date;

but if the settlement’s expenses relating to administration and taxation for a year of assessment exceed its income for the year, property or income provided towards meeting those expenses shall be ignored for the purposes of this condition if the value of the property or income so provided does not exceed the difference between the amount of those expenses and the amount of the settlement’s income for the year.

(4)

The second condition is that—

(a)

the trustees F3cease on or after 19 March 1991 to be resident in the United Kingdom, or

(b)

the trustees, while continuing to be resident F4... in the United Kingdom, become on or after 19th March 1991 trustees who fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.

(5)

The third condition is that on or after 19th March 1991 the terms of the settlement are varied so that any person falling within sub-paragraph (7) below becomes for the first time a person who will or might benefit from the settlement.

(6)

The fourth condition is that—

(a)

on or after 19th March 1991 a person falling within sub-paragraph (7) below enjoys a benefit from the settlement for the first time, and

(b)

the person concerned is not one who (looking only at the terms of the settlement immediately before 19th March 1991) would be capable of enjoying a benefit from the settlement on or after that date.

F5(6A)

The fifth condition is that the settlement ceases to be a protected settlement at any time on or after 6th April 1999.

(7)

Each of the following persons falls within this sub-paragraph—

(a)

a settlor;

(b)

the spouse F6or civil partner of a settlor;

(c)

any child of a settlor or of a settlor’s spouse F6or civil partner;

(d)

the spouse F6or civil partner of any such child;

F7(da)

any grandchild of a settlor or of a settlor’s spouse F6or civil partner;

(db)

the spouse F6or civil partner of any such grandchild;

(e)

a company controlled by a person or persons falling within paragraphs (a) to F8(db) above;

(f)

a company associated with a company falling within paragraph (e) above.

F9(8)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)

For the purposes of sub-paragraph (7) above the question whether a company is controlled by a person or persons shall be construed in accordance with F10sections 450 and 451 of CTA 2010; but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under F11section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

(10)

For the purposes of sub-paragraph (7) above the question whether one company is associated with another shall be construed in accordance with F12section 449 of CTA 2010; but where in deciding that question for those purposes it falls to be decided whether a company is controlled by a person or persons, no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under F13section 451(4) to (6) of CTA 2010 if he is not a participator in the company.

F14(10A)

Subject to sub-paragraph (10B) below, a settlement is a protected settlement at any time in a year of assessment if at that time the beneficiaries of that settlement are confined to persons falling within some or all of the following descriptions, that is to say—

(a)

children of a settlor or of a spouse F15or civil partner of a settlor who are under the age of eighteen at that time or who were under that age at the end of the immediately preceding year of assessment;

(b)

unborn children of a settlor, of a spouse F15or civil partner of a settlor, or of a future spouse F15or civil partner of a settlor;

(c)

future spouses F16or civil partners of any children or future children of a settlor, a spouse F15or civil partner of a settlor or any future spouse F15or civil partner of a settlor;

(d)

a future spouse F15or civil partner of a settlor;

(e)

persons outside the defined categories.

(10B)

For the purposes of sub-paragraph (10A) above a person is outside the defined categories at any time if, and only if, there is no settlor by reference to whom he is at that time a defined person in relation to the settlement for the purposes of paragraph 2(1) above.

(10C)

For the purposes of sub-paragraph (10A) above a person is a beneficiary of a settlement if—

(a)

there are any circumstances whatever in which relevant property which is or may become comprised in the settlement is or will or may become applicable for his benefit or payable to him;

(b)

there are any circumstances whatever in which relevant income which arises or may arise under the settlement is or will or may become applicable for his benefit or payable to him;

(c)

he enjoys a benefit directly or indirectly from any relevant property comprised in the settlement or any relevant income arising under the settlement.

(10D)

In sub-paragraph (10C) above—

“relevant property” means property originating from a settlor; and

“relevant income” means income originating from a settlor.

F17(11)

In this paragraph—

  • “child” includes a step-child;

  • “grandchild” means a child of a child;

  • “participator” has the meaning given by F18section 454 of CTA 2010.