Section 554Q | Exclusions: income arising from earmarked sum or asset ^F1

(1)This section applies if—

(a)a sum of money or asset (“sum or asset R”) is held by or on behalf of a person (“P”),

(b)income arises from sum or asset R, and

(c)when the income arises, it—

(i)is received by or on behalf of P, and

(ii)is the subject of a relevant step within section 554B taken by P.

(2)Chapter 2 does not apply by reason of the relevant step mentioned in subsection (1)(c)(ii) if—

(a)before the income arises, sum or asset R was the subject of a relevant step within section 554B taken by P,

(b)Chapter 2 applied by reason of the relevant step mentioned in paragraph (a) in respect of A's employment with B or would have so applied apart from this section or section 554R or any of sections 554H to 554M or section 554T,

(c)immediately before the income arises, sum or asset R is still earmarked or otherwise held on the basis mentioned in section 554B(1)(a) or (b), and

(d)subsection (3) does not apply.

(3)This subsection applies if it is reasonable to suppose that, taking into account the type of investments from which the income derives (directly or indirectly), in essence, the income represents a return from sum or asset R which exceeds the return which might be expected applying the assumption that all relevant connected persons are acting at arm's length of each other.

(4)In subsection (3) “relevant connected person” means a person with a connection (direct or indirect) to the arrangement under which the income arises.