Part 2Double taxation relief
CHAPTER 2Double taxation relief by way of credit
Credits where same income charged to income tax in more than one tax year
22Credit for foreign tax on overlap profit if credit for that tax already allowed
(1)Subsection (2) applies in relation to foreign tax (“FT”) paid in respect of any income if—
(a)the income is overlap profit, and
(b)credit for FT would have been allowed under section 18(2) against income tax chargeable for a tax year (“year L”) in respect of the income but for the fact that credit for FT had been allowed against income tax chargeable in respect of the income for a previous tax year.
(2)Credit for FT is allowed against income tax chargeable for year L in respect of the income.
(3)The amount of credit allowed for year L under subsection (2) in respect of the income must not exceed the difference between—
(a)T, and
(b)the amount of credit which was in fact allowed, under subsection (2) or section 18(2), in respect of the income for any earlier tax year or years.
(4)For the purposes of subsection (3)(a), T is the amount (“A”) of the foreign tax charged on the income, but this is subject to subsections (5) to (7).
(5)If Y exceeds FP—
where—
Y is the number of tax years for which credit is allowed, under subsection (2) or section 18(2), against income tax in respect of the income, and
FP is the number of foreign periods of assessment.
(6)For the purposes of subsection (5), a tax year or foreign period of assessment for which part only of the income is charged to tax is counted not as one year or period but as a fraction of a year or period, the fraction being—
where—
P is that part of the income, and
W is the whole of the income.
(7)If the same income is charged to different foreign taxes for different foreign periods of assessment—
(a)subsection (5) (read with subsection (6)) is to be applied separately to each of those taxes, and
(b)T is the sum of those taxes after subsection (5) has been applied to them in accordance with paragraph (a).
(8)In this section—
“overlap profit” has the same meaning as in Chapter 15 of Part 2 of ITTOIA 2005 (see section 204 of that Act), and
“foreign period of assessment”, in relation to any income, means a period for which the income is, under the law of the non-UK territory, charged to the foreign tax concerned.