Income Tax (Trading and Other Income) Act 2005

Chapter 4 Unremittable income

841 Unremittable income: introduction

(1) This Chapter applies if—

(a) a person is liable for income tax on income arising in a territory outside the United Kingdom, and

(b) the income is unremittable.

(2) For the purposes of this Chapter, income is unremittable if conditions A and B are met.

(3) Condition A is that the income cannot be transferred to the United Kingdom by the person who is liable for income tax in respect of the income because of—

(a) the laws of the territory where the income arises,

(b) executive action of its government, or

(c) the impossibility of obtaining there currency that could be transferred to the United Kingdom.

(4) Condition B is that the person who is liable for income tax in respect of the income has not realised it outside that territory for an amount in sterling or in another currency which the person is not prevented from transferring to the United Kingdom.

(5) This Chapter does not apply to profits which a person is treated as receiving under section 714(2) of ICTA (accrued income profits), but see section 723 of that Act (which makes similar provision).

842 Claim for relief for unremittable income

(1) If a person liable for income tax on unremittable income makes a claim for relief under this section in respect of that income, it is not taken into account for income tax purposes.

(2) Subsection (1) is subject to section 843.

(3) No claim under this section may be made in respect of any income so far as an ECGD payment has been made in relation to it.

(4) In subsection (3) “ECGD payment” means a payment made by the Export Credit Guarantee Department under an agreement entered into as a result of arrangements made under—

(a) section 2 of the Export and Investment Guarantees Act 1991 (c. 67) (insurance in connection with overseas investment), or

(b) section 11 of the Export Guarantees and Overseas Investment Act 1978 (c. 18).

(5) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year for which the income would be charged to tax if no claim were made.

843 Withdrawal of relief

(1) This section applies if—

(a) a claim under section 842 has been made in relation to any income, and

(b) either—

(i) the income ceases to be unremittable, or

(ii) an ECGD payment is made in relation to it.

(2) In this section “ECGD payment” has the meaning given by section 842(4).

(3) If income ceases to be unremittable, the income is treated as arising on the date on which it ceases to be unremittable.

(4) If an ECGD payment is made in relation to income, the income is treated, to the extent of the payment, as arising on the date on which the ECGD payment is made.

(5) The income treated as arising under subsection (3) or (4), and any tax payable in respect of it under the law of the territory where it arises, are taken into account for income tax purposes at their value at the date on which the income is treated as arising.

(6) Subsections (3) to (5) do not apply so far as the income has already been treated as arising as a result of this section.

(7) If a person who would have become liable for income tax as a result of this section has died—

(a) the personal representatives are liable for the tax instead, and

(b) the tax is a debt due from and payable out of the estate.

844 Income charged on withdrawal of relief after source ceases

(1) This section applies if—

(a) income is treated as arising as a result of section 843, and

(b) at the time it is so treated the person who would have become liable for income tax as a result of that section—

(i) has permanently ceased to carry on the trade, profession, vocation or property business from which the income arises, or

(ii) in the case of income from another source, has ceased to possess that source.

(2) In the case of income from a trade, profession or vocation—

(a) the income is treated as a post-cessation receipt for the purposes of Chapter 18 of Part 2 (trading income: post-cessation receipts), but

(b) in the application of that Chapter to that income, section 243 (extent of charge to tax) is omitted.

(3) In the case of income from a property business—

(a) the income is treated as a post-cessation receipt from a UK property business for the purposes of Chapter 10 of Part 3 (property income: post-cessation receipts), but

(b) in the application of that Chapter to that income, section 350 (extent of charge to tax) is omitted.

(4) In the case of income from another source, the income is taxed as if the person continued to possess that source.

845 Valuing unremittable income

(1) If no claim is made under section 842 in relation to unremittable income arising in a territory outside the United Kingdom, the amount of the income to be taken into account for income tax purposes is determined as follows.

(2) If the currency in which the income is denominated has a generally recognised market value in the United Kingdom, the amount is determined by reference to that value.

(3) In any other case, the amount is determined according to the official rate of exchange of the territory where the income arises.