What is an associated operation under section 719 of the Income Tax Act 2007?

An associated operation is any operation of any kind, carried out by any person, in connection with transferred assets, assets directly or indirectly representing those transferred assets, income arising from those assets, or assets representing accumulated income from those assets. The definition is deliberately broad to prevent avoidance through indirect arrangements.

Does the timing of an operation matter for it to be classed as an associated operation?

No. Under section 719, the timing of the operation relative to the transfer is entirely irrelevant. The operation may take place before, at the same time as, or after the transfer of assets. This prevents arrangements being deliberately sequenced to avoid falling within the definition of an associated operation.

Can replacement assets or reinvested income be caught as associated operations?

Yes. Assets that directly or indirectly represent transferred assets, such as property purchased with sale proceeds, are caught. Income arising from those replacement assets and any further assets representing accumulated income, such as bonds purchased with rental income, also fall within the definition of associated operations.

Why is the definition of associated operation under section 719 so wide?

The definition is deliberately broad to give HMRC considerable scope to examine the entire chain of transactions surrounding a transfer of assets abroad. It prevents taxpayers from structuring multi-step or indirect arrangements to circumvent the transfer of assets abroad anti-avoidance provisions in United Kingdom tax law.

Income Tax Act 2007 section 719

Meaning of "associated operation"

Section 719 defines what counts as an "associated operation" in relation to a transfer of assets, for the purposes of the transfer of assets abroad rules.

An associated operation is any action carried out by any person in connection with the transferred assets, or any assets directly or indirectly representing those transferred assets.
It also covers any income arising from those assets, and any assets representing accumulated income from those assets.
The timing of the operation does not matter — it can occur before, after or at the same time as the transfer of assets.
The definition is deliberately broad, catching operations of any kind by any person, to prevent avoidance through indirect or multi-step arrangements.

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