Income Tax Act 2007 section 809EZDB

Sums arising to connected company or unconnected person

Section 809EZDB deals with situations where a sum arises to a company connected with an individual, or to an unconnected person, but the individual effectively enjoys the benefit of that sum — in which case the sum is treated as arising to the individual for the purposes of the disguised investment management fees rules.

• Where a sum arises to a connected company or an unconnected person, and the individual (or someone connected with them) effectively benefits from it, the sum is treated as arising to the individual for tax purposes.
• Five "enjoyment conditions" test whether the individual benefits — including where the sum increases the value of their assets, where they receive a benefit from it, where they could become entitled to it through the exercise of powers, or where they can control how it is applied.
• Certain exclusions apply: mere shareholding does not trigger the rules, and sums properly taxed within a connected company (including via the controlled foreign company regime) are excluded — unless the arrangements were designed to avoid tax.
• Anti-avoidance provisions override the exclusions where it is reasonable to assume the sum would otherwise have arisen to the individual and the arrangements have tax avoidance as a main purpose, including where the sum is invested in a collective investment scheme.