Anti-avoidance

408ATemporary non-residents

1

This section applies if an individual is temporarily non-resident.

2

Dividends within subsection (3) are to be treated for the purposes of this Chapter as if they were received by the individual, or as if the individual became entitled to them, in the period of return.

3

A dividend is within this subsection if—

a

the individual receives or becomes entitled to it in the temporary period of non-residence,

b

it is a dividend of a company that would be a close company if the company were UK resident,

c

the individual receives or becomes entitled to it by virtue of being at a relevant time—

i

a material participator in the company, or

ii

an associate of a material participator in the company, and

d

ignoring this section, the individual—

i

is not liable for tax under this Chapter in respect of the dividend, but

ii

would have been so liable if the individual had received the dividend, or become entitled to it, in the period of return.

4

For the purposes of subsection (3)—

a

“associate” and “participator” have the same meanings as in Part 10 of CTA 2010 (see sections 448 and 454),

b

a “material participator” is a participator who has a material interest in the company, as defined in section 457 of that Act,

c

“relevant time” means—

i

any time in the year of departure or, if the year of departure is a split year as respects the individual, the UK part of that year, or

ii

any time in one or more of the 3 tax years preceding that year, and

d

paragraph (d)(i) includes a case where the individual could be relieved of liability on the making of a claim under section 6 of TIOPA 2010 (double taxation relief), even if no claim is in fact made.

5

If section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for the year of return, any dividend within subsection (3) that was remitted to the United Kingdom in the temporary period of non-residence is to be treated as remitted to the United Kingdom in the period of return.

6

This section does not apply to a dividend within subsection (3) to the extent that it is paid in respect of post-departure trade profits.

7

“Post-departure trade profits” are—

a

trade profits of the company arising in an accounting period that begins after the start of the temporary period of non-residence, and

b

so much of any trade profits of the company arising in an accounting period that straddles the start of that temporary period as is attributable (on a just and reasonable basis) to a time after the start of that temporary period.

8

The extent to which a dividend is paid in respect of post-departure trade profits is to be determined on a just and reasonable basis.

9

If section 406 or 407 applies, references in this section to a dividend being received by the individual are to a cash dividend being paid over to the individual or (as the case may be) a dividend being treated as paid to the individual.

10

In this section—

• “remitted to the United Kingdom” has the meaning given in Chapter A1 of Part 14 of ITA 2007;

• “trade profits of the company” means the profits of any trade carried on by the company, as they would be calculated in accordance with Part 3 of CTA 2009 (trading income) if the company were UK resident.