Avoiding a taxable remittance to the UK by using multiple transfers

Looking at the non dom legislation governing remittances there are various tests that need to be satisfied before a remittance is classed as a 'taxable remittance'. In this article we look at one opportunity that could avoid these remittance tests. The legislation provides a wide definition of a remittance. There are 3 key ways that it can tax remittances back to the UK. In the legislation this is referred to as Conditions A(&B), Condition C or Condition D. Condition A is satisfied where money or property is brought to or received or used in the UK by or for the benefit of a relevant person. Condition C applies to "gift recipients". Condition D applies to "connected operations". Looking at an example Jack is a non dom who gifts an overseas painting (representing unremitted overseas income) to an offshore trust from which he and his spouse are excluded from benefiting. The trust then gives the painting to Jacks adult child, Bob. Bob then brings the painting into the UK and allows Jack and his Mother to use it there at no cost. Is this a remittance? Assuming that the gifts are genuine gifts and given that the trust and Bob aren't relevant persons for the purposes of the legislation there could be an argument that there is no taxable remittance. Condition A Of key importance for this Condition (as opposed to Conditions C and D) is that it is capable of applying only where the property brought to, received or used in, the UK is property which belongs to a relevant person at that time. For Conditions C and D to apply it's exactly the opposite and the property brought to the UK needs to be owned by someone who is not a relevant person. Therefore in this case there is no remittance under Category A as Bob is not a relevant person in relation to Jack (as he's an adult, and not a minor child). Condition C This applies to property which belongs to a person who is not a relevant person and to whom the individual, i.e. Jack, has made a gift of money or other property which is or derives from the income or gains. Therefore it follows that this is only applicable where the person owning the property which is brought to, received or used in the UK received that property (or property from which it derives) from the Non-Dom himself i.e. the individual whose income or gains are in question. Based on this in this example as Bob has not received any property from Jack there should not be a remittance under this category. Condition D This applies to property brought to, received or used in the UK which belongs to a person who is neither a relevant person nor a gift recipient and where, that owner received it as a result of a disposition made by a relevant person to or for the benefit of that owner. Therefore although this wider than Condition C the recipient still needs to have received it from a relevant person. So again, Condition D shouldn't apply as Bob did not receive the painting from a relevant person. It may therefore be possible to argue that there was no taxable remittance in this case.