INTM602660 | Transfer of assets abroad: Exemptions from charge: Applying for exemption

There is no specific method of applying for exemption. However, the normal completion of the self-assessment tax return makes provision for the individual to indicate if they are relying on the exemption for not including an amount of income that would otherwise have been chargeable to tax. It calls for the facts on which the individual is relying to be stated as well as the amount for which the individual is claiming exemption.

The exemption applies automatically if the facts show that the conditions are met. It is not therefore the subject of a ‘claim’ under the normal claims mechanism of the Tax Acts (TMA70/S42).

However, to obtain exemption the individual must show:

• in writing or otherwise to satisfy an officer of HMRC (INTM602680)

• by reference to each and every one of the transactions that would result in there being an income or benefits charge if there is no exemption (INTM602700)

• that the necessary conditions for exemption have been met.

In view of these pre-requisites, it is essential that individuals who may be relying on an exemption give a full and clear exposition of all the facts that would otherwise have resulted in a charge, and how they satisfy the conditions for exemption, including applicable amounts, when completing their self-assessment tax return.

The detail included in the explanation will be an important factor to be considered when an individual’s self-assessment tax return is being risk assessed. If the explanation offered is simply that the exemption from charge applies because there was no tax avoidance motive for example, consideration will need to be given to opening an enquiry to determine whether this was in fact the case and on what evidence such a conclusion has been based.