Income Tax (Trading and Other Income) Act 2005

Firms with a foreign element

857 Partners to whom the remittance basis may apply

(1) This section applies if—

(a) a firm carries on a trade wholly or partly outside the United Kingdom,

(b) the control and management of the trade is outside the United Kingdom, and

(c) a partner who is a UK resident individual—

(i) meets condition A or B in section 831 (conditions to be met for income to be charged on the remittance basis), and

(ii) makes a claim to that effect for a tax year.

(2) The partner’s share of the profits of the trade arising in the United Kingdom is determined in accordance with sections 849 to 856.

(3) The partner’s share of the profits of the trade arising outside the United Kingdom is treated as relevant foreign income for the purposes of this Act (see Part 8).

858 Resident partners and double taxation agreements

(1) This section applies if—

(a) a UK resident (“the partner”) is a member of a firm which—

(i) resides outside the United Kingdom, or

(ii) carries on a trade the control and management of which is outside the United Kingdom, and

(b) by virtue of any arrangements having effect under section 788 of ICTA (“the arrangements”) any of the income of the firm is relieved from income tax in the United Kingdom.

(2) The partner is liable to income tax on the partner’s share of the income of the firm despite the arrangements.

(3) If the partner’s share of the income of the firm consists of or includes a share in a qualifying distribution—

(a) made by a UK resident company, and

(b) chargeable to tax under Chapter 3 of Part 4,

the partner (and not the firm) is, despite the arrangements, entitled to the share of the tax credit which corresponds to the partner’s share of the distribution.