Section 741 | Application of section 742 (partial exemption)

(1)Section 742 (partial exemption where later associated operations fail conditions) applies if—

(a)an individual is liable to tax because of section 720 or 727 for a tax year (the “taxable year”) because condition B in section 737(4) (genuine commercial transaction: post-4 December 2005 transactions) is not met, and

(b)subsections (2) and (3) apply.

(2)This subsection applies if—

(a)since the relevant transfer there has been at least one tax year for which the individual was not so liable by reference to the relevant transactions effected before the end of the year, and

(b)the individual was not so liable for that year because—

(i)condition B in section 737(4) was met, or

(ii)condition B in section 739(4) (genuine commercial transaction: pre-5 December 2005 transactions) was met.

(3)This subsection applies if the income by reference to which the individual is liable to tax for the taxable year is attributable—

(a)partly to relevant transactions by reference to which one of those conditions was met for the last exempt tax year, and

(b)partly to associated operations not falling within paragraph (a).

(4)For the purposes of this section a tax year is exempt if—

(a)it is one of the tax years mentioned in subsection (2), and

(b)there is no earlier tax year for which the individual was liable to tax because of section 720 or 727 by reference to the relevant transactions or any of them.

(5)References in this section to a person being liable to tax for a tax year because of section 720 or 727 include references to the individual being so liable had any income been treated as arising to the individual for that year under section 721 or 728.