Part 14Income tax liability: miscellaneous rules

F1Chapter A1Remittance basis

F2Business investment relief

809VMCases involving tax deposits

(1)

This section applies in cases where—

(a)

section 809VG(2) did not apply because the appropriate mitigation steps were taken within the grace period allowed for each step,

(b)

the amount required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b) had been reduced under section 809VK, and

(c)

but for that reduction, the amount that was actually taken offshore or re-invested would not have been enough to satisfy section 809VI(1) or (2)(b).

(2)

The tax deposit that gave rise to the reduction is referred to in this section as “the tax deposit”.

(3)

Use of the tax deposit to pay the relevant tax liability does not count as remitting the underlying income or gains to the United Kingdom (and, accordingly, section 809VA(2) continues to apply to the income or gains).

(4)

If any of the CTD conditions is breached, the underlying income or gains are to be treated as having been remitted to the United Kingdom immediately after the day on which the breach occurs.

(5)

“The underlying income or gains” means such portion of the affected income or gains (within the meaning of section 809VG) as is—

(a)

represented by the payment, in the case of subsection (3), or

(b)

affected by the breach, in the case of subsection (4).

(6)

The CTD conditions are as follows—

(a)

the tax deposit must not be used to pay a tax liability other than the relevant tax liability,

(b)

if any of the tax deposit is withdrawn by the depositor, the amount withdrawn must be taken offshore or re-invested within the period of 45 days beginning with the day on which the withdrawal was made, and

(c)

any part of the tax deposit that has been neither used to pay a tax liability nor withdrawn by the due date must be withdrawn by the depositor and taken offshore or re-invested within the period of 45 days beginning with that date.

(7)

Where the CTD conditions were not breached because the requisite amount was taken offshore or re-invested within the 45-day period mentioned in subsection (6)(b) or (c)—

(a)

section 809VL applies to the amount taken offshore or re-invested as it applies to disposal proceeds, but

(b)

read the reference in section 809VL(4)(a) to the potentially chargeable event as a reference to—

(i)

the withdrawal, in a case within subsection (6)(b), and

(ii)

the due date, in a case within subsection (6)(c).

(8)

For the purposes of this section—

(a)

“the relevant tax liability” means P's liability to capital gains tax for the tax year in which the disposal took place,

(b)

“the due date” means the date by which the relevant tax liability is required to be paid,

(c)

“re-invested” has the meaning given in section 809VI(7), and

(d)

references to withdrawal include repayment for whatever reason.