Background
9.Section 47 and Schedule 12 of Finance Act 2012 introduced a number of changes to the remittance basis of taxation provided by Chapter A1 of Part 14 of ITA 2007. These changes followed Government consultation in 2011.
10.In their formal response to that consultation in December 2011, the Government said further consideration would be given to a number of further issues with a view to possible legislation in Finance Act 2013. These included new rules for inadvertent remittances which can arise in certain circumstances which are set out in this section and changes to the rules on exempt property which are set out in Schedule 7.
11.The annual remittance basis charge is payable by long-term UK non-domiciled residents who elect to be taxed on the remittance basis. The annual charge is provided for by section 809H of ITA 2007and is either £30,000 or £50,000, depending whether the individual meets the 7-year residence test or the 12-year residence test (as set out in section 809C of ITA). Payments of the charge using foreign income and gains do not constitute a taxable remittance by virtue of section 809V ITA 2007, but that exemption does not extend to repayments of that charge by HMRC.
12.In cases where an individual is liable to pay the remittance basis charge in a previous tax year, any payments on account which are made in the following year will relate to that charge. Where an individual decides not to be taxed on the remittance basis in that later year, and so will not be liable to pay the annual charge, they may be due a repayment from HMRC. The application of section 809V(2) will mean that such repayments will constitute a taxable remittance.
