Income Tax Act 2007 section 720

Charge to tax on income treated as arising under section 721

Section 720 imposes an income tax charge on UK-resident individuals who have the power to enjoy income arising from relevant transfers of assets abroad, and identifies who is liable for that charge.

• The charge exists specifically to prevent UK-resident individuals from avoiding income tax by transferring assets abroad so that income arises to a person overseas rather than to themselves
• Income tax is charged on the full amount of income treated as arising to the individual in the tax year, as determined under section 721, though special rules apply where benefits are provided out of the income of a person abroad
• The individual to whom the income is treated as arising is the person liable to pay the tax, with potential reductions available where a controlled foreign company is involved and certain deductions and reliefs also available
• Exemptions from the charge may apply where there is no tax avoidance purpose or where the transfer forms part of a genuine commercial transaction

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