Capital Acquisitions Tax Consolidation Act 2003 section 8

Disponer in certain connected dispositions

Section 8 is an anti-avoidance provision that prevents tax avoidance through gift-splitting, where property is passed through intermediaries to reduce or eliminate Capital Acquisitions Tax (CAT) liability.

• Where two or more gifts are made by successive disponers within a three-year window, each subsequent donee is deemed to have received their gift directly from the original disponer, not from the intermediary who actually transferred the property.
• The three-year window runs from three years before to three years after the date of the original gift; however, further transfers in the chain (e.g. from a second donee to a third) are caught regardless of whether they fall within the three-year period.
• If the original disponer dies within two years of making the original disposition (provided it was made on or after 1 April 1975), the gift deemed to come from the original disponer is reclassified as an inheritance rather than a gift.
• The section does not apply where it can be shown that the second or subsequent dispositions were not made to enable or facilitate the original disposition, or to recoup its cost — genuine, unconnected transactions are excluded.