INTM604360 - Transfer of assets abroad: Administration: List of indicators

The provisions are intended to be wide-ranging and will catch many offshore avoidance arrangements. In their simplest form, cases vulnerable to challenge under the transfer of assets legislation may involve only a single overseas company, trust or partnership. However, usually the arrangements will be more complex, using a series of inter-connected companies or other foreign legal entities such as stiftungs, anstalts and foundations, perhaps linked with non-resident trusts and partnerships.

You may identify arrangements indicative of possible liability while examining company accounts, or when investigating the tax affairs of individuals. The following list suggests areas where a more detailed examination of potential risks is required. See INTM604380 regarding referrals to WMBC Assets, Incentives and Reliefs (AIR) where you think the legislation may apply.

• Shares or loan capital of a UK company are owned by, sold or transferred to a foreign company, trust or other such entity
• An individual sets up, or reveals a connection with, or interest in, a foreign private company, offshore trust or other such entity (including overseas entities such as anstalts, stiftungs, establishments and foundations, etc.)
• Assets are sold or otherwise transferred offshore (including cash subscribed for shares, or the settlement of money in a trust)
• The sale of a family business involving any offshore entity, particularly if family connections remain e.g., an individual continues as a director after disposing of shares to the offshore entity
• An individual’s services are provided to or by a UK company via a foreign service company or other foreign intermediary
• UK income sources or trading expenses (including rent or interest) are being paid offshore.
• An individual makes loans or receives loans from an offshore entity or benefits in some way from assets held offshore e.g., the occupation of a property owned by an offshore company or trust.
• An individual, company or trust has otherwise acquired or transferred assets abroad, from which no income or low income is returned (the tax return may show the cessation of the source of income previously received, now paid offshore)
• Known or suspected links to tax haven countries e.g., Channel Islands, Isle of Man, Bahamas, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Cyprus, Gibraltar, Liechtenstein, Liberia, Netherlands Antilles, Panama and Vanuatu.
• The white space of the self-assessment return or accompanying letters gives some of the following:
  • Shows that transactions have taken place which have resulted in income or gains arising to an offshore trust or company but which the taxpayer claims do not result in a liability to UK tax.
  • The taxpayer has received capital payments or benefits from an offshore trust or company but claims that these do not result in an income tax charge or a CGT liability under TCGA92/S87 (see also CG38200).
  • CG computations show transfers that may not have been at arm’s length.