The transfer of assets abroad anti-avoidance provisions did not apply in the circumstances to dividends from a UK company to an offshore trust created by a UK resident (and ordinarily resident) but Cyprus domiciled settlor, trustee, and discretionary beneficiary. 

During the tax years 2005/06 and 2006/07, an individual (AR; a Cyprus national) was resident and ordinarily resident, but not domiciled, in the UK. He was a 50% shareholder of a UK company (A), which provided investment advice. 

Relations between AR and A’s other 50% shareholder (Mr C) deteriorated. AR did not have sufficient funds to buy Mr C’s shares personally. He therefore arranged for a new company (F) to be formed in the BVI to borrow $15 million to buy Mr C’s shares, and for F to be 100% owned by a new family discretionary trust (R), which was governed by Cyprus law. AR was