Income Tax (Trading and Other Income) Act 2005

Chapter 2 Relevant foreign income charged on remittance basis

Remittance basis

831 Claims for relevant foreign income to be charged on the remittance basis

(1) A person may make a claim for a tax year for the person’s relevant foreign income to be charged for that year in accordance with section 832.

(2) The claim must state that condition A or B is met.

(3) Condition A is that the person is not domiciled in the United Kingdom.

(4) Condition B is that the person is not ordinarily UK resident.

(5) This section does not apply to relevant foreign income arising in the Republic of Ireland.

832 Relevant foreign income charged on the remittance basis

(1) If a person makes a claim under section 831(1) for a tax year in respect of relevant foreign income, income tax is charged on the full amount of the sums received in the United Kingdom in the tax year in respect of the income.

(2) For the purposes of subsection (1), it does not matter whether the income arises in the year for which the claim is made or arose in an earlier year in which the person was UK resident.

(3) The only case in which deductions are allowed is where the income is from a trade, profession or vocation carried on outside the United Kingdom.

(4) In that case the same deductions are allowed as are allowed under the Income Tax Acts where the trade, profession or vocation is carried on in the United Kingdom.

(5) This section is subject to section 835 (relief for delayed remittances).

833 Income treated as remitted: repayment of UK-linked debts

(1) For the purposes of section 832, if a person who is ordinarily resident, but is not domiciled, in the United Kingdom uses relevant foreign income outside the United Kingdom to satisfy a UK-linked debt, the person is treated as receiving the income in the United Kingdom at the time when it is so used.

(2) Subsection (1) is subject to subsection (5).

(3) In subsection (1) “UK-linked debt”, in relation to a person, means—

(a) a debt for money lent to the person in the United Kingdom, or for interest on money so lent,

(b) a debt for money lent to the person outside the United Kingdom and received in the United Kingdom, or

(c) a debt incurred for satisfying—

(i) a debt falling within paragraph (a) or (b), or

(ii) another debt falling within this paragraph.

(4) In the case of a debt (within subsection (3)(b) or (c)) for money lent to the person outside the United Kingdom, it does not matter whether the money lent is received in the United Kingdom before or after the income is used to satisfy the debt.

(5) But in the case of such a debt if the money lent is not received in the United Kingdom until after the income is so used, the person is treated as receiving the income in the United Kingdom when the money lent is received there (instead of at the time provided in subsection (1)).

(6) For the purposes of this section, if any of the money lent is used to satisfy a debt, the debt for the money so used is treated as incurred for satisfying that other debt.

(7) In subsections (3) to (5) any reference to money lent being received in the United Kingdom includes a reference to its being brought there.

(8) Section 834 sets out circumstances in which a person is treated as using income to satisfy a debt for the purposes of this section.

(9) In this section and that section “satisfy”, in relation to a debt, means satisfy wholly or in part.

834 Arrangements treated as repayment of UK-linked debts

(1) A person to whom money has been lent (“the borrower”) is treated for the purposes of section 833 as using relevant foreign income to satisfy a debt if conditions A and B are met.

(2) Condition A is that the borrower uses the income in such a way that the lender holds money or property representing the income on behalf or on account of the borrower in such circumstances that it is available to the lender to satisfy the debt (by set-off or otherwise).

(3) Condition B is that under an arrangement between the borrower and the lender—

(a) the amount for the time being owed by the borrower to the lender, or

(b) the time at which the debt is to be satisfied,

depends in any respect, directly or indirectly, on the amount or value the lender holds on behalf or on account of the borrower as mentioned in subsection (2).

(4) In this section “lender”, in relation to money lent, includes any person for the time being entitled to repayment.

Relief for delayed remittances

835 Relief for delayed remittances

(1) If section 832 (relevant foreign income charged on the remittance basis) applies to income for a tax year, the person liable for the tax may make a claim for relief under this section in respect of any of the income which meets conditions A and B (“delayed income”).

(2) Condition A is that the income arose before the tax year for which relief is claimed.

(3) Condition B is that the income could not have been transferred by the person to the United Kingdom before the tax year because of—

(a) the laws of the territory where the income arose,

(b) executive action of its government, or

(c) the impossibility of obtaining there currency that could be transferred to the United Kingdom.

(4) If a person claims relief for a tax year in respect of delayed income, that income is to be deducted from the income charged to tax for that year in accordance with section 832.

(5) The delayed income is to be treated as if it were income received in the United Kingdom in the tax year in which it arose.

836 Relief for delayed remittances: backdated pensions

(1) This section applies if—

(a) section 832 applies to a pension or annuity, or an increase in a pension or annuity, that is treated as relevant foreign income as a result of section 575(3), 613(4) or 635(4) of ITEPA 2003,

(b) the pension, annuity or increase was granted retrospectively, and

(c) an amount of pension, annuity or increase is paid in respect of a tax year (“the earlier year”) before the tax year in which it was granted.

(2) For the purposes of section 835 that amount of pension, annuity or increase is treated as income arising in the earlier year from a source that the person liable for the tax possessed in the earlier year.

(3) The condition in section 835(3) only applies to the pension, annuity or increase in the period after it becomes payable.

837 Claims for relief on delayed remittances

(1) A claim under section 835 must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year for which the relief is claimed.

(2) All adjustments (by way of repayment of tax, assessment or otherwise) are to be made which are necessary to give effect to section 835.

(3) Those adjustments may be made at any time, despite anything to the contrary in the Income Tax Acts.

(4) A person’s personal representatives may make any claim under section 835 which the person might have made.

(5) If a person dies—

(a) any tax paid by the person and repayable because of a claim under section 835 is to be repaid to the personal representatives, and

(b) the person’s personal representatives are liable for any additional tax which arises because of a claim under that section.

(6) If subsection (5)(b) applies, the additional tax—

(a) is to be assessed on the personal representatives, and

(b) is a debt due from and payable out of the estate.