OpenLegislation

Paragraph 19

United Kingdom

(1)

Section 401C of ITTOIA 2005 is amended as follows.

(2)

After subsection (6) insert—

“(6A)

Where—

(a)

a company (“company A”) makes a payment (including by way of a loan) to the individual in the temporary period of non-residence,

(b)

the individual is, at a relevant time, a material participator in, or is an associate of a material participator in, another company that is a close company (“company B”),

(c)

at the time the payment is made, company B controls (within the meaning of sections 450 and 451 of CTA 2010) company A, and

(d)

it is reasonable to suppose that the making of that payment is intended to avoid an amount being received by the individual by way of relevant distribution made, or treated as made, by company B,

company A is to be treated as making a relevant distribution of that amount to the individual in that period.

(6B)

Where—

(a)

a company makes a payment (including by way of a loan) to any person other than the individual at any time in the temporary period of non-residence,

(b)

if the company had made a dividend to the individual at that time, it would have been a relevant distribution, and

(c)

the individual receives an amount or a benefit (“the relevant receipt”) as a result of arrangements that it is reasonable to suppose are intended to secure that—

(i)

the individual receives the benefit of the payment or any part of it, but

(ii)

without a relevant distribution having been made, or treated as made, to the individual in that period,

the company is to be treated as making a relevant distribution to the individual in that period in the amount of the value of the relevant receipt.

(6C)

For the purposes of subsection (6B)(c) “arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).”

(3)

After subsection (6C) (as inserted by sub-paragraph (2)) insert—

“(6D)

Where tax of a similar character to income tax is payable by the individual under the law of a territory outside the United Kingdom on a relevant distribution—

(a)

credit for any such tax paid by the individual is to be allowed against income tax chargeable in respect of the relevant distribution, and

(b)

the credit is to be given effect by treating the amount of the relevant distribution as reduced to such amount as would secure that so much of the credit is given as does not exceed the income tax chargeable in respect of the relevant distribution.”

(5)

In subsection (12) omit the definition of “trade profits of the close company”.