INTM604380 - Transfer of assets abroad: Administration: Referrals to WMBC Assets, Incentives and Reliefs (AIR)

If a referral is to be made to the WMBC Assets, Incentives and Reliefs (AIR) team in Edinburgh then in the subject field of your email you should enter “Transfer of Assets Abroad referral”.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Cases involving offshore structures may be complex and their investigation can be time-consuming. The amount of tax at risk is not always initially apparent and clearly we need to have an idea of the potential tax at risk. Therefore, some preliminary research may be necessary depending on the type of case being risk assessed before a decision can be taken about whether to open an enquiry. You should bear in mind that individuals seeking to avoid UK tax may go to a lot of trouble and expense to set up an offshore structure and may therefore be reluctant to co-operate if asked to supply information.

You may also need to consider whether evasion is an issue (i.e. what was the source of the assets transferred) and take into account any other relevant anti-avoidance legislation.

If you have an open enquiry, or are about to open one, that involves aspects other than the transfer of assets provisions, then during the course of your enquiry you may be able to request further details and documents relating to the offshore structure. Details of the types of documentation that may be helpful are at INTM604400. You may wish to do some of this initial fact finding to establish the risks before referring to WMBC Assets, Incentives and Reliefs (AIR). Alternatively, if it is apparent that the legislation may apply, you should make the referral before opening your enquiry. If you do not already have an open case enquiry and the only or main risk under consideration is transfer of assets, you should submit your file to WMBC Assets, Incentives and Reliefs (AIR) before any enquiry is opened.

Taxpayers or their advisors may seek to test HMRC’s response to a small amount of potential liability, with the intention of avoiding much greater amounts at a future date. For example, where a UK company’s shares are owned by an offshore trust and only a very small dividend has been paid, but there are substantial retained profits that could be paid as a dividend in the future. Therefore, it is important that you do not close an open enquiry without risk assessing both the actual and potential risks.

When a case is referred to WMBC Assets, Incentives and Reliefs (AIR), that office will consider all the available facts to decide whether a challenge is appropriate and how each case should be worked. They will then let you know what has been decided and how to proceed. INTM604420 explains how cases may be worked in practice. In some instances, it may be decided that a challenge is unlikely to succeed, or for example that it would not be cost effective to pursue the suspected liability. In such cases the officer will not be expected to apply the transfer of asset provisions. However, if further facts emerge from an ongoing enquiry into other aspects of a taxpayer’s return, suggesting that the earlier decision should have been reconsidered, the case should be referred to WMBC Assets, Incentives and Reliefs (AIR) for re-evaluation.

You should not enter into correspondence with the taxpayer or his agent on the application of the exemption provisions. Any enquiry from a taxpayer or professional adviser about the scope and effect of the legislation, or its application to a particular taxpayer, should be referred directly to the Personal Tax International (PTI) technical team (see INTM604440). You may also contact the PTI technical team for general advice on this legislation should you be unable to find an answer in this manual.