Transfer of assets abroad rules apply to rent-free occupation

The taxpayer’s husband who died in 2002 bought a property which he transferred to a Jersey-owned company Namib incorporated by him in 1994. He also established a non-UK resident discretionary trust Blest in which he settled the shares in another Jersey resident company he incorporated Watcher. Broadly Watcher made loans to Namib for upkeep and maintenance. The taxpayer lived in the property under a licence to occupy both while they were married and after his death.

HMRC issued assessments to the taxpayer on the basis that she was liable to income tax under ITA 2007 s 731 to s 733 (the transfer of assets abroad (TOAA) provisions). Under those provisions income would be treated as arising where a UK-resident individual received a benefit provided out of assets which were available for the purpose as a result of a ‘relevant transfer’...