Income and Corporation Taxes Act 1988

584 Relief for unremittable overseas income U.K.

(1) M1 Where [F1 a company is chargeable to corporation tax] by reference to the amount of any income arising in a territory outside the United Kingdom (“overseas income”), then [F2 for the purposes of corporation tax] this section shall apply to the overseas income in so far as—

(a) [F3 the company] is prevented from transferring the amount of the overseas income to the United Kingdom, either by the laws of that territory or any executive action of its government or by the impossibility of obtaining foreign currency in that territory; and

(b) [F3 the company] has not realised the overseas income outside that territory for a consideration in sterling or a consideration in some other currency which [F3 the company] is not prevented from transferring to the United Kingdom.

Overseas income to which this section applies is referred to below as unremittable.

[F4 (2) Subject to subsection (2A) below, where [F5 a company] so chargeable makes a claim under this subsection in relation to any overseas income—

(a) which is unremittable; and

(b) to which subsection (1)(a) above will continue to apply notwithstanding any reasonable endeavours on [F6 its] part,

then, in the first instance, account shall not be taken of that income, [F7 and corporation tax shall be assessable] and shall be charged on all persons concerned and for all periods accordingly.

(2A) If on any date paragraph (a) or (b) of subsection (2) above ceases to apply to any part of any overseas income in relation to which a claim has been made under that subsection—

(a) that part of the income shall be treated as income arising on that date, and

(b) account shall be taken of it, and of any tax payable in respect of it under the law of the territory where it arises, according to their value at that date.]

(4) Where [F8 [F9 a company becomes chargeable to] corporation tax in respect of income from any source by virtue of subsection (2) or (2A)] above after it has ceased to possess that source of income, the income shall be chargeable under Case VI of Schedule D.

(5) M2 Where under an agreement entered into under arrangements made by the Secretary of State in pursuance of section 11 of the M3 Export Guarantees and Overseas Investment Act 1978 any payment is made by the Export Credit Guarantee Department in respect of any income which cannot be transferred to the United Kingdom, then, to the extent of the payment, the income shall be treated as income [F10 to which paragraphs (a) and (b) of subsection (2) above do not apply (and accordingly cannot cease to apply)].

[F11 (6) A claim under subsection (2) above—

(a) F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) for the purposes of corporation tax, shall be made no later than two years after the end of the accounting period in which the income arises.]

(7) F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Subject to subsections (2) and [F13 (2A)] above, the amount of any unremittable overseas income shall be determined by reference to the generally recognised market value in the United Kingdom (if any), or, in the absence of any such value, according to the official rate of exchange of the territory where the income arises.

(9) Any appeal against an assessment which involves a question as to the operation of this section shall be made to the Special Commissioners and not to the General Commissioners.

(10) M4 This section shall have effect as respects any accounting period in which the conditions in subsection (2) above cease to be satisfied in relation to any income, being an accounting period ending on or before such day, not being earlier than 31st March 1992, as the Treasury may by order appoint for the purposes of this section, with the omission of subsections (3) and (4).

Subordinate Legislation Made

P1 S. 584(10) power exercised: 30.9.1993 appointed by S.I. 1992/3066, art. 2(2)(b)

Textual Amendments

F1 Words in s. 584(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(2)(a) (with Sch. 2)

F2 Words in s. 584(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(2)(b) (with Sch. 2)

F3 Words in s. 584(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(2)(c) (with Sch. 2)

F4 S. 584(2)(2A) substituted for s. 584(2)(3) (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 33(2)

F5 Words in s. 584(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(3)(a) (with Sch. 2)

F6 Word in s. 584(2)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(3)(b) (with Sch. 2)

F7 Words in s. 584(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(3)(c) (with Sch. 2)

F8 Words in s. 584(4) substituted (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 33(3)

F9 Words in s. 584(4) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(4) (with Sch. 2)

F10 Words in s. 584(5) substituted (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 33(4)

F11 S. 584(6) substituted (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 33(5)

F12 S. 584(6)(a)(7) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 245(5), Sch. 3 (with Sch. 2)

F13 Words in s. 584(8) substituted (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 33(7)

Modifications etc. (not altering text)

C1 See 1979(C) s.13—delayed remittances of capital gains.

Marginal Citations

M1 Source-1970 s.418(1), (2), (2A), (2B); 1987 (No.2) Sch.6 6

M2 Source-1972 s.124(2)(a)

M3 1978 c. 18.

M4 Source-1987 (No.2) Sch.6 6(5)