Taxation of Chargeable Gains Act 1992 section 87HA

Onward gifts from non-residents or qualifying new residents

Section 87HA targets arrangements where capital payments from non-resident trusts are routed through a non-UK resident (or qualifying new resident) intermediary before being passed on to a UK-resident individual, so that the UK-resident recipient cannot escape the trust gains charge.

• Where a non-UK resident (or qualifying new resident) receives a capital payment from a non-resident trust and passes it on (directly or indirectly) to a UK-resident person, the onward gift is treated as a capital payment received by the UK-resident person directly from the trustees.
• The rule applies where, at the time the original payment is received, there are arrangements or an intention for the benefit to be passed on to a person expected to be UK resident when they receive it.
• The onward gift must occur within three years after the original payment, or before it if made in anticipation — and can take any form, including the original payment itself, anything derived from it, or other property connected with the arrangement.
• Where the onward gift conditions are met, it is presumed that the necessary arrangements or intention existed at the time of the original payment, unless the taxpayer can demonstrate otherwise.