Income and Corporation Taxes Act 1988

811 Deduction for foreign tax where no credit allowable. U.K.

M1 (1) For the purposes of the Tax Acts, the amount of any income arising in any place outside the United Kingdom shall, subject to subsection (2) below, be treated as reduced by any sum which has been paid in respect of tax on that income in the place where the income has arisen (that is to say, tax payable under the law of a territory outside the United Kingdom).

(2) Subsection (1) above—

(a) shall not apply to income the tax on which is to be computed by reference to the amount of income received in the United Kingdom; F1 . . . [F2 and]

(b) F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F5 (d) shall not require any income to be treated as reduced by an amount of underlying tax which, by virtue of section 799(1B)(b), falls to be left out of account for the purposes of section 799;]

and this section has effect subject to section 795(2) [F6 and to section 111 of the Finance Act 2004 (computation of income subject to special withholding tax)].

[F7 (3) This section has effect for the purposes of corporation tax notwithstanding anything in [F8 —

(a)] [F9 section 464(1) of CTA 2009] (matters to be brought into account in the case of loan relationships only under [F9 Part 5] of that Act) [F10 ; or

(b) [F11 section 906(1) of CTA 2009] (matters to be brought into account in respect of intangible fixed assets only under [F11 Part 8 of that Act]).]]

[F12 (3A) If—

(a) income of any person (“P”) is treated under subsection (1) as reduced by a sum paid in respect of tax on that income in the place where the income has arisen (“foreign tax”), and

(b) a payment is made by a tax authority to P, or any person connected with P, by reference to the foreign tax,

the amount of P's income is to be increased by an amount equal to the payment made to P or the connected person.

(3B) Section 839 applies for the purposes of determining whether or not a person is connected with P.]

[F13 (4) Where the amount by which any income is treated under subsection (1) above as reduced is rendered excessive or insufficient by reason of any adjustment of the amount of any tax payable either—

(a) in the United Kingdom, or

(b) under the law of any other territory,

[F14 or the amount of P's income is increased under subsection (3A),] nothing in the Tax Acts limiting the time for the making of assessments or claims for relief shall apply to any assessment or claim to which the [F15 adjustment or increase gives rise], being an assessment or claim made not later than six years from the time when [F16 all such assessments, adjustments, increases] and other determinations have been made, whether in the United Kingdom or elsewhere, as are material in determining whether any and if so what reduction under subsection (1) above falls to be treated as made [F17 or increase under subsection (3A) falls to be made].

(5) Subject to subsection (7) below, where—

(a) the amount of any income of a person is treated under subsection (1) above as reduced by any sum, and

(b) the amount of that reduction is subsequently rendered excessive by reason of an adjustment of the amount of any tax payable under the law of a territory outside the United Kingdom [F18 or an increase under subsection (3A)],

that person shall give notice in writing to an officer of the Board that an adjustment [F19 or increase] has been made that has rendered the amount of the reduction excessive.

(6) A notice under subsection (5) above must be given within one year from the time of the making of the adjustment [F20 or increase].

(7) Subsections (5) and (6) above do not apply where the adjustment [F20 or increase] is one whose consequences in relation to the reduction fall to be given effect to in accordance with regulations made under—

(a) section 182(1) of the M2 Finance Act 1993 (regulations relating to individual members of Lloyd’s); or

(b) section 229 of the M3 Finance Act 1994 (regulations relating to corporate members of Lloyd’s).

(8) A person who fails to comply with the requirements imposed on him by subsections (5) and (6) above in relation to any adjustment [F20 or increase] shall be liable to a penalty of an amount not exceeding the amount of the difference specified in subsection (9) below.

(9) The difference is that between—

(a) the amount of tax payable by the person in question for the relevant chargeable period, after giving effect to the reduction that ought to be made under subsection (1) above; and

(b) the amount that would have been the tax so payable after giving effect instead to a reduction under that subsection of the amount rendered excessive as mentioned in subsection (5)(b) above.

(10) For the purposes of subsection (9) above “the relevant chargeable period” means the chargeable period as respects which the reduction was treated as made.]

Textual Amendments

F1 Word preceding s. 811(2)(b) repealed (with effect in accordance with Sch. 27 para. 6(3) of the repealing Act) by Finance Act 2001 (c. 9), Sch. 27 para. 6(2)(a), Sch. 33 Pt. 2(8), Note

F2 Word at the end of s. 811(2)(a) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 200(a) (with Sch. 2)

F3 S. 811(2)(b) and word repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 200(b), Sch. 3 Pt. 1 (with Sch. 2)

F4 S. 811(2)(c) and preceding word repealed (with effect as mentioned in s. 103(3)(4) of the amending Act) by 1993 c. 34, ss. 103(2)(g)(3)(4), 213, Sch. 23 Pt. III(9)

F5 S. 811(2)(d) inserted (with effect in accordance with Sch. 27 para. 6(3) of the amending Act) by Finance Act 2001 (c. 9), Sch. 27 para. 6(2)(c)

F6 Words in s. 811(2) inserted (22.7.2004) by Finance Act 2004 (c. 12), s. 284(1), s. 115(2)

F7 S. 811(3) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 47 (with Sch. 15)

F8 Words in s. 811(3) renumbered as s. 811(3)(a) (24.7.2002) by virtue of Finance Act 2002 (c. 23), Sch. 30 para. 5(5)

F9 Words in s. 811(3)(a) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 263(a) (with Sch. 2 Pts. 1, 2)

F10 S. 811(3)(b) and preceding word inserted (24.7.2002) by Finance Act 2002 (c. 23), Sch. 30 para. 5(5)

F11 Words in s. 811(3)(b) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 263(b) (with Sch. 2 Pts. 1, 2)

F12 S. 811(3A)(3B) inserted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(9)

F13 S. 811(4)-(10) inserted (with effect in accordance with Sch. 30 para. 27(3) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 27(2)

F14 Words in s. 811(4) inserted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(10)(a)

F15 Words in s. 811(4) substituted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(10)(b)

F16 Words in s. 811(4) substituted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(10)(c)

F17 Words in s. 811(4) inserted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(10)(d)

F18 Words in s. 811(5)(b) inserted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(11)(a)

F19 Words in s. 811(5) inserted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(11)(b)

F20 Words in s. 811(6)(7)(8) inserted (with effect in accordance with s. 59(13) of the amending Act) by Finance Act 2009 (c. 10), s. 59(12)

Marginal Citations

M1 Source—1970 s.516; 1973 s.40(1); 1987 Sch.15 2(19)

M2 1993 c. 34.

M3 1994 c. 9.