»Ê¹ÚÌåÓýapp

Where you discover that a taxpayer has entered into an arrangement with another person who is neither a ‘relevant person� nor a ‘gift recipient� so that a chargeable remittance has been made of the original taxpayers foreign income or gains, the amount remitted under the terms of Condition D is calculated in the same way as a remittance that is made under the terms of Condition C.

Example

John personally owns a country estate in Cornwall, in an area of outstanding natural beauty. His friend Janet wishes to use the mansion for several important family functions.

Janet is a remittance basis user. She owns a foreign yacht which she bought using £600,000 of her foreign income and gains. On 2 March she disposes of the yacht to a non-resident company for £150,000.

John has a controlling interest in that non-resident company. In October, with reference to the transfer of the yacht, John allows Janet full and exclusive use of the estate, rent-free.

Although Janet enjoys John’s property in the UK, John is not a gift recipient (the yacht was given to his company, not to John). Condition C cannot therefore apply.

»Ê¹ÚÌåÓýapp company is not a relevant person (as Janet is not a participator). John is not a relevant person in relation to Janet either.

»Ê¹ÚÌåÓýappre is a qualifying disposition because:

• »Ê¹ÚÌåÓýappre is a disposal of property (the yacht) which derived from Janet’s income or chargeable gains (ITA07/S809O(4)(c))
• »Ê¹ÚÌåÓýapp disposal was made by a relevant person (Janet) (ITA07/S809O(4)(a))
• »Ê¹ÚÌåÓýapp disposal was for the benefit of John (although the disposal was not made directly to John, he benefits from it through his ownership of the company) (ITA07/S809O(4)(b))
• John’s property is enjoyed in the UK by a relevant person (Janet) (ITA07/S809L(5)(a) and ITA07/S809O(4)(b))

In this example Janet’s advantage is due to a connected operation (ITA07/S809O(3)) and Condition D will be met. Janet has made a chargeable remittance of £450,000. That is because this is a partial disposal - the yacht cost £600,000 and was sold for £150,000 - the chargeable amount is calculated by reference to the amount of foreign income and gains that were used to purchase the yacht not its value when it is sold. »Ê¹ÚÌåÓýapp amount that was paid for the yacht must be taken into account when calculating the amount that has been remitted.