88 Gains of dual resident settlements.U.K.
(1)Section 87 also applies to a settlement for any year of assessment beginning on or after 6th April 1991 if—
(a)the trustees are [F1resident and ordinarily resident in the United Kingdom during any part of the year], [F2and]
(b)at any time of [F3such residence and ordinary residence] they fall to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom, F4...
F4(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F5(2)The section 2(2) amount for a tax year for which section 87 applies by virtue of this section is what it would be if the amount mentioned in section 87(4)(a) were the assumed chargeable amount.]
(3)For the purposes of subsection (2) above the assumed chargeable amount in respect of a year of assessment is the lesser of the following 2 amounts—
(a)the amount on which the trustees would be chargeable to tax for the year under section 2(2) on the assumption that the double taxation relief arrangements did not apply;
(b)the amount on which, by virtue of disposals of protected assets, the trustees would be chargeable to tax for the year under section 2(2) on the assumption that those arrangements did not apply.
(4)For the purposes of subsection (3)(b) above assets are protected assets if—
(a)they are of a description specified in the double taxation relief arrangements, and
(b)were the trustees to dispose of them at any relevant time, the trustees would fall to be regarded for the purposes of the arrangements as not liable in the United Kingdom to tax on gains accruing to them on the disposal.
(5)For the purposes of subsection (4) above—
(a)the assumption specified in subsection (3)(b) above shall be ignored;
(b)a relevant time is any time, in the year of assessment concerned, when the trustees fall to be regarded for the purposes of the arrangements as resident in a territory outside the United Kingdom;
(c)if different assets are identified by reference to different relevant times, all of them are protected assets.
F6(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F7(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Words in s. 88(1) substituted (6.4.2007) by Finance Act 2006 (c. 25), Sch. 12 paras. 35(1)(a)(2)(b), 41
F2Word in s. 88(1)(a) inserted (with effect in accordance with s. 130(3) of the amending Act) by Finance Act 1998 (c. 36), s. 130(2)(a)
F3Words in s. 88(1) substituted (6.4.2007) by Finance Act 2006 (c. 25), Sch. 12 paras. 35(1)(b)(2)(b), 41
F4S. 88(1)(c) and preceding word repealed (with effect in accordance with s. 130(3) of the amending Act) by Finance Act 1998 (c. 36), s. 130(2)(b), Sch. 27 Pt. III(30)
F5S. 88(2) substituted (with effect in accordance with Sch. 7 para. 115 of the amending Act) by Finance Act 2008 (c. 9), Sch. 7 para. 109(2)
F6S. 88(6) omitted (with effect in accordance with Sch. 2 para. 22 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 2 para. 6
F7S. 88(7) omitted (with effect in accordance with Sch. 7 para. 115 of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 7 para. 109(3)
Modifications etc. (not altering text)
C1Ss. 87, 87A, 87C-90 applied (with modifications) by Income and Corporation Taxes Act 1988 (c. 1), s. 762(3) (as 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))
C2Ss. 87-89 modified (21.7.2008) by Finance Act 2008 (c. 9), Sch. 7 para. 125(2)
C3Ss. 87-90A applied (with modifications) (with effect in accordance with art. 1(2)(3), Sch. 1 of the amending S.I.) by The Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), regs. 1(1), 20(3)(4)