OpenLegislation

Paragraph 22

United Kingdom

(1)

Section 812A of ITA 2007 is amended as follows.

(2)

After subsection (4) insert—

“(4A)

Where—

(a)

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

(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 was 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 the amount of the payment being included in the individual’s income for the non-resident year as relevant investment income,

the amount of the payment is to be treated as relevant investment income of the individual for the non-resident year.

(4B)

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 non-resident year,

(b)

if the company had made a dividend to the individual at that time, it would be relevant investment income of the individual, 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 the amount being included in the individual’s income for the non-resident year as relevant investment income,

the amount of the value of the relevant receipt is to be treated as relevant investment income of the individual for the non-resident year.

(4C)

For the purposes of subsection (4B)(c) “arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).”

(3)

After subsection (4C) (as inserted by sub-paragraph (2)) insert—

“(4D)

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 relevant investment income—

(a)

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

(b)

the credit is to be given effect by treating the amount of the relevant investment income 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 investment income.”

(4)

Omit subsections (5) and (6).

(6)

In subsection (11) omit the definition of “trade profits of the distributing company”.