807B Certain transitional arrangements in relation to transfer of assets abroad

Summary

This section determines whether the anti-avoidance purpose test for exemption in a particular case is to be done under the “old” rules in section 806(8) or under the “new” rules in section 806(10). The section also provides for cases where there are transactions before and after 1 February 2007 (the date the new rules came into effect):

For the purposes of section 806, the new rules only apply to income arising on or after 1 February 2007. For the purposes of section 807A, the new rules apply to benefits received on or after 1 February 2007, with transitional rules for benefits received in 2007; however, income arising before 1 February 2007 can count as relevant income in relation to a benefit received on or after that date.

Details

(1) The following definitions are used in the section:

“new transaction” means a relevant transaction (i.e. a transfer and any associated operation) that is effected on or after the relevant date (i.e. 1 February 2007).

“old transaction” means a relevant transaction that is effected before the relevant date.

“relevant date” means 1 February 2007, which is the date of publication of Finance Bill 2007.

“relevant transaction” means the transfer and any associated operation, as defined in section 806(10).

(2) The rules as to which anti-avoidance purpose test should apply are as follows:

• Section 806(8) is the appropriate test if all the relevant transactions are old (i.e. effected before 1.2.2007).
• Section 806(10) is the appropriate test if all the relevant transactions are new (i.e. effected after 1.2.2007).
• Section 807B(3) applies where there are both old and new transactions (i.e. mixed transactions).

(3)(a) Where the old transactions have failed the old anti-avoidance test in section 806(8) or the new transactions have failed the new anti-avoidance test in section 806(10), then the transfer of assets rules apply apart from any exemptions (because the anti-avoidance test has been failed) but subject to certain modifications if the reason for the failure of the test was due only to the fact that the new test was failed.

(3)(b) The modifications to the application of the transfer of assets provisions that are to apply in relation to mixed (old and new) transactions, when only the new (post 1.2.2007) anti-avoidance test is failed are as follows:

For the purposes of section 806, income arising before 1 February 2007 does not count as income of the non-resident person, and

For the purposes of section 807A, two adjustments are applied:

• Firstly, where an individual gets a benefit in 2007 or a later year of assessment, the process of determining relevant income for years up to and including that year of assessment must take account of relevant income that arose before 1 February 2007, as well as after.
• Secondly, where an individual receives a benefit in 2007, any part of the benefit that (on a time apportionment basis) he/she was able to enjoy before 1 February 2007 is not to be taken into account.

Relevant Date: Finance Act 2019