Finance Act 1985

50 Agents acting for non-residents. U.K.

(1) Section 78 of the M1 Taxes Management Act 1970 (method of charging non-residents) shall be amended in accordance with subsection (2) and (3) below, and the amendments made by those subsections shall have effect—

(a) for the year 1985-86 and subsequent years of assessment, in the case of profits or gains chargeable to income tax; and

(b) for accounting periods ending on or after 1st April 1985, in the case of profits or gains chargeable to corporation tax.

(2) After the words “Subject to” there shall be inserted “subsection (2) below and”.

(3) At the end of the section there shall be inserted the following subsections—

“(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—

(a) transactions in shares, stock or securities of any other description, excluding commodity or financial futures,

(b) transactions on a recognised futures exchange, within the meaning of the Capital Gains Tax Act 1979, 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.

(4) Subsection (2) above does not apply to profits or gains which constitute income of an offshore fund, within the meaning of Chapter VII of Part II of the Finance Act 1984.

(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 533 of the principal Act.”

Marginal Citations

M1 1970 c. 9.