Taxes Management Act 1970

78 Method of charging non-residents. [1952 s.369.] U.K.

(1) Subject to [subsection (2) below and F1 ] section [43 F2 ] of the principal Act (Schedule A etc.) a person not resident in the United Kingdom, whether a British subject or not, shall be assessable and chargeable to income tax in the name of any such trustee, guardian, tutor, curator or committee as is mentioned in section 72 of this Act, or of any branch or agent, whether the branch or agent has the receipt of the profits or gains or not, in like manner and to the like amount as such non-resident person would be assessed and charged if he were resident in the United Kingdom and in the actual receipt of such profits or gains F3 .

F4 [(2) Subject to the following provisions of this section, a person who is not resident in the United Kingdom shall not, by virtue of this section, be chargeable in the name of an agent in respect of profits or gains arising from investment transactions carried out by the agent if—

(a) the agent is carrying on a business of providing investment management services to a number of clients of whom the non-resident person is one; and

(b) the investment transactions concerned were carried out in the ordinary course of the business referred to in paragraph (a) above; and

(c) the remuneration which the agent receives for the provision of investment management services to the non-resident person is at a rate which is not less than that which is customary for that class of business; and

(d) in the case of profits or gains which are chargeable to tax as the profits or income of the non-resident person from carrying on a trade in the United Kingdom through a branch or agency, the agent carrying out the investment transaction is also the agency through which the trade is carried on;

and in the case of an agent who provides investment management services as part only of a business, paragraphs (a) to (d) above shall apply as if that part were a separate business.

(3) In subsection (2) above “investment transactions” means—

[F5 (a) transactions in shares, stock, futures contracts, options contracts or securities of any description not mentioned in this paragraph, but excluding futures contracts or options contracts relating to land,]

(b) transactions on a recognised futures exchange, within the meaning of the [F6 1992 Act], and

(c) the placing of money at interest,

and for the purposes of that subsection an agent carries out such a transaction on behalf of his client whether he undertakes the transaction himself or by giving instructions to another person.

[F7 (3A) For the purposes of subsection (3) above a contract is not prevented from being a futures contract or an options contract by the fact that any party is or may be entitled to receive or liable to make, or entitled to receive and liable to make, only a payment of a sum (as opposed to a transfer of assets other than money) in full settlement of all obligations.]

(4 )F8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Subsection (2) above does not apply if the non-resident person and the agent are connected with each other, within the terms of section [839 F9 ] of the principal Act.]

Textual Amendments

F1 Finance Act 1985 s.50for 1985—86et seq. for profits or gains chargeable to income tax and for accounting periods ending on or after1April1985for profits etc. chargeable to corporation tax.

F2 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F3 See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 43—s. 78not applicable to tax on profits within Sch. A,or in certain cases Sch. D Case VI,where payment made direct to person whose usual place of abode is outside the United Kingdom.

F4 S. 78(2)-(5) inserted by Finance Act 1985 (c. 54), s. 50for1985—86 et seq. for profits or gains chargeable to income tax and for accounting periods ending on or after1April1985for profits etc. chargeable to corporation tax.

F5 S. 78(3)(a) substituted (25.7.1991) by Finance Act 1991 (c. 31, SIF 63:1), s. 81(2)(5)

F6 Words in s. 78(3)(b) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 2(2) (with ss. 60, 101(1), 171, 201(3)).

F7 S. 78(3A) inserted (25.7.1991) by Finance Act 1991 (c. 31, SIF 63:1), s. 81(3)(5)

F8 S. 78(4) repealed (25.7.1991) by Finance Act 1991 (c. 31, SIF 63:1), ss. 81(4)(5), 123, Sch. 19 Pt. V Note 1.

F9 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.