RDRM33410 | Remittance Basis: Identifying Remittances: Condition D: Condition D - Connected operations - overview

Note: The guidance in this section about Condition D is intended simply to illustrate the basic principles of the legislation (section 809L(5) ITA 2007). It is not possible to provide a comprehensive statement about the scope or potential application of Condition D.

Condition D is a stand-alone condition. It can apply independently of Conditions A and B (see RDRM33100), and Condition C (see RDRM33200). Very broadly, the purpose of Condition D is to tax foreign income or gains which are used to provide property, benefits or services which are enjoyed in the UK, as a result of indirect but connected arrangements which fall outside the scope of Conditions A and B, or Condition C.

A connected operation (see RDRM33430) takes place where a taxpayer gives property (including money) to some other person, and in doing so there is an ‘expectation’ for other property or money to be given in return, or for a service to be provided in the UK for the individual’s or another relevant person’s (see RDRM33030) enjoyment.

This type of arrangement is sometimes referred to as ‘offshore alienation’.

Condition D applies where:

• a relevant person makes a ‘qualifying disposition’

• the disposition is made to someone who is not a ‘relevant person’ or a ‘gift recipient’

• any disposition is of money or property that is, or that derives from, the individual’s foreign income or chargeable gains

• the qualifying disposition is made to a person who then uses some other property in such a way that a relevant person enjoys that property because the property is:

  • brought to, received or used in the UK and either the property is enjoyed, or as a result a benefit is enjoyed by a relevant person

  • used as consideration for a service enjoyed in the UK by the relevant person

  • used outside the UK, directly or indirectly, and as a result a benefit is enjoyed in the UK by a relevant person

  • used outside the UK, directly or indirectly, in respect of a relevant debt

• there is a connected operation, that is, an operation or arrangement effected with reference to the qualifying disposition or in order to enable or facilitate that qualifying disposition.

To note, the enjoyment of a benefit as a result of qualifying property being brought to, received or used in the UK, and the enjoyment of a benefit as a result of qualifying property being used outside the UK, applies to remittances on or after 6 April 2025.

The effect of Condition D is that taxpayers cannot arrange their affairs so that they avoid making a taxable remittance of foreign income and gains by agreeing with another person who is not a ‘relevant person’ (so that Conditions A and B apply), or a ‘gift recipient’ (so that Condition C applies) that property, including money of the other person is brought to the UK for the benefit of the taxpayer or any other ‘relevant person’.

Where Condition D applies, foreign income and gains of the taxpayer are treated as having been remitted to the UK.