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Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

158

 

(c)   

the individual’s civil partner,

(d)   

a child or grandchild of a person falling within any of

paragraphs (a) to (c), if the child or grandchild has not

reached the age of 18,

(e)   

a close company in which a person falling within any other

5

paragraph of this subsection is a participator,

(f)   

a company in which a person falling within any other

paragraph of this subsection is a participator, and which

would be a close company if it were resident in the United

Kingdom,

10

(g)   

the trustees of a settlement of which a person falling within

any other paragraph of this subsection is a settlor or

beneficiary, or

(h)   

a body connected with such a settlement.

(3)   

For that purpose—

15

(a)   

a man and woman living together as husband and wife are

treated as if they were husband and wife;

(b)   

two people of the same sex living together as if they were civil

partners of each other are treated as if they were civil partners

of each other;

20

(c)   

“close company” has the same meaning as in the Corporation

Tax Acts (see sections 414 and 415 of ICTA);

(d)   

“settlement” and “settlor” have the same meaning as in

Chapter 2 of Part 9;

(e)   

“beneficiary”, in relation to a settlement, means any person

25

who receives, or may receive, any benefit under or by virtue

of the settlement;

(f)   

“trustee” has the same meaning as in section 993 (see, in

particular, section 994(3)); and

(g)   

a body is “connected with” a settlement if the body falls

30

within section 993(3)(c), (d), (e) or (f) as regards the

settlement.

809M    

Section 809K: gift recipients, qualifying property and enjoyment

(1)   

This section applies for the purposes of determining whether or not

income or chargeable gains of an individual are remitted to the

35

United Kingdom by virtue of condition C in section 809K(4).

(2)   

A “gift recipient” means a person, other than a relevant person, to

whom the individual makes a gift of money or other property that—

(a)   

is income or chargeable gains of the individual, or

(b)   

derives (wholly or in part, and directly or indirectly) from

40

income or chargeable gains of the individual.

(3)   

The question of whether or not a person is a relevant person is to be

determined by reference to the time when a gift is made.

(4)   

But, if a person to whom a gift is made subsequently becomes a

relevant person, the person ceases to be a gift recipient.

45

(5)   

The individual “makes a gift of” property if the individual disposes

of the property—

(a)   

for no consideration, or

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

159

 

(b)   

for consideration less than the full consideration in money or

money’s worth that would be given if the disposal were by

way of a bargain made at arm’s length;

   

but, in a case falling in paragraph (b), the individual is to be taken to

make a gift of only so much of the property as exceeds the

5

consideration actually given.

(6)   

A reference to the individual making a gift of property includes a

case where—

(a)   

the individual retains an interest in the property, or

(b)   

an interest, right or arrangement enables or entitles the

10

individual to benefit from the property.

(7)   

“Qualifying property”, in relation to a gift recipient, is—

(a)   

the property that the individual gave to the gift recipient,

(b)   

anything that derives (wholly or in part, and directly or

indirectly) from that property, or

15

(c)   

any other property, but only if it is dealt with as mentioned

in section 809K(4)(a), (b) or (c) by virtue of an operation

which is effected—

(i)   

with reference to the gift of the property to the gift

recipient, or

20

(ii)   

with a view to enabling or facilitating the gift of the

property to the gift recipient to be made.

(8)   

In subsection (7)—

(a)   

the reference in paragraph (b) to anything deriving from

property, and

25

(b)   

the reference in paragraph (c) to other property,

   

includes a thing, or property, that does not belong to the individual

but which the individual is enabled or entitled to benefit from by

virtue of any interest, right or arrangement.

(9)   

Enjoyment by a relevant person of property or a service is to be

30

disregarded in any of these cases—

(a)   

if the property or service is enjoyed virtually to the entire

exclusion of all relevant persons;

(b)   

if full consideration in money or money’s worth is given by a

relevant person for the enjoyment; or

35

(c)   

the property or service is enjoyed by relevant persons in the

same way, and on the same terms, as it may be enjoyed by the

general public or by a section of the general public.

(10)   

The provisions of this section apply for the purposes of sections 809K

to 809N.

40

809N    

Section 809K: dealings where there is a connected operation

(1)   

This section applies for the purposes of determining whether or not

income or chargeable gains of an individual are remitted to the

United Kingdom by virtue of condition D in section 809K(5).

(2)   

For the purposes of section 809K(5), the question of whether or not

45

the person whose property is dealt with as mentioned in paragraph

(a), (b) or (c) of section 809K(5) is a relevant person is to be

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

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determined by reference to the time when the property is so dealt

with.

(3)   

A “connected operation”, in relation to property dealt with as

mentioned in section 809K(5)(a), (b) or (c), means an operation which

is effected—

5

(a)   

with reference to a qualifying disposition, or

(b)   

with a view to enabling or facilitating a qualifying

disposition.

(4)   

A “qualifying disposition” is a disposition that—

(a)   

is made by a relevant person,

10

(b)   

is made to, or for the benefit of, the person whose property is

dealt with as mentioned in section 809K(5)(a), (b) or (c), and

(c)   

is a disposition of money or other property that is, or derives

(wholly or in part, and directly or indirectly) from, income or

chargeable gains of the individual.

15

(5)   

But a disposition of property is not a qualifying disposition if the

disposition is, or is part of, the giving of full consideration in money

or money’s worth for the dealing that falls within section 809K(5)(a),

(b) or (c).

(6)   

Enjoyment by a relevant person of property or a service is to be

20

disregarded in any of these cases—

(a)   

if the property or service is enjoyed virtually to the entire

exclusion of all relevant persons;

(b)   

if full consideration in money or money’s worth is given by a

relevant person for the enjoyment; or

25

(c)   

the property or service is enjoyed by relevant persons in the

same way, and on the same terms, as it may be enjoyed by the

general public or by a section of the general public.

(7)   

The provisions of this section apply for the purposes of sections 809K

to 809M (and this section).

30

809O    

Section 809K: amount remitted

(1)   

The amount of income or chargeable gains remitted to the United

Kingdom is to be determined as follows.

(2)   

If the property or consideration is the income or chargeable gains, the

amount remitted is equal to the amount of the income or chargeable

35

gains.

(3)   

If the property or consideration derives from the income or

chargeable gains, the amount remitted is equal to the amount of

income or chargeable gains from which the property or

consideration derives.

40

(4)   

If the income or chargeable gains are used as mentioned in section

809K(3)(c), the amount remitted is equal to the amount of income or

chargeable gains used; but this is subject to subsection (10).

(5)   

If anything deriving from the income or chargeable gains is used as

mentioned in section 809K(3)(c), the amount remitted is equal to the

45

 
 

Finance Bill
Schedule 7 — Remittance basis
Part 1 — Main provisions

161

 

amount of income or chargeable gains from which what is used

derives; but this is subject to subsection (10).

(6)   

In a case falling within section 809K(4)(a) or (b), the amount remitted

is equal to the amount of the relevant income or chargeable gains.

(7)   

In a case falling within section 809K(4)(c), the amount remitted is

5

equal to the amount of the relevant income or chargeable gains; but

this is subject to subsection (10).

(8)   

In a case falling within section 809K(5)(a) or (b), the amount remitted

is equal to the amount of the income or chargeable gains referred to

in section 809N(4)(c).

10

(9)   

In a case falling within section 809K(5)(c), the amount remitted is

equal to the amount of the income or chargeable gains referred to in

section 809N(4)(c); but this is subject to subsection (10).

(10)   

If the debt is only partly in respect of the property or service, the

amount remitted is (if it would otherwise be greater) limited to the

15

amount the debt would be if it were wholly in respect of the property

or service.

(11)   

In subsections (6) and (7), “relevant income or chargeable gains”

means—

(a)   

if the qualifying property falls within section 809M(7)(a), the

20

income or gains—

(i)   

of which the qualifying property consists, or

(ii)   

from which the qualifying property derives;

(b)   

if the qualifying property falls within section 809M(7)(b), the

income or gains—

25

(i)   

of which the property given to the gift recipient

consisted, or

(ii)   

from which that property derived;

(c)   

if the qualifying property falls within section 809M(7)(c), the

income or gains—

30

(i)   

of which the property given to the gift recipient

consists, or

(ii)   

from which that property derives.

(12)   

If the amount remitted (taken together with any amount previously

remitted) would otherwise exceed the amount of the income or

35

chargeable gains, the amount remitted is limited to the amount

which, when taken together with any amount previously remitted, is

equal to the amount of the income or chargeable gains.

809P    

Sections 809K and 809O: transfers from mixed funds

(1)   

This section applies for the purposes mentioned in subsection (2)

40

where condition A in section 809K is met and—

(a)   

the property or consideration for the service is (wholly or in

part), or derives (wholly or in part, and directly or indirectly)

from, a transfer from a mixed fund, or

(b)   

a transfer from a mixed fund, or anything deriving (wholly or

45

in part, and directly or indirectly) from such a transfer, is

used as mentioned in section 809K(3)(c).

 
 

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Schedule 7 — Remittance basis
Part 1 — Main provisions

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(2)   

The purposes referred to in subsection (1) are—

(a)   

determining whether condition B in section 809K is met, and

(b)   

if it is met, determining (under section 809O) the amount of

income or chargeable gains remitted.

(3)   

The extent to which the transfer is of the individual’s income or

5

chargeable gains is to be determined as follows.

   

Step 1

   

For each of the categories of income and capital in paragraphs (a) to

(i) of subsection (4), find (applying section 809Q) the amount of

income or capital of the individual for the relevant tax year in the

10

mixed fund immediately before the transfer.

   

“The relevant tax year” is the tax year in which the transfer occurs.

   

Step 2

   

Find the earliest paragraph for which the amount determined under

step 1 is not nil.

15

   

If that amount does not exceed the amount of the transfer, treat the

transfer as containing the income or capital within that paragraph

(and for that tax year).

   

Otherwise, treat the transfer as containing the relevant proportion of

each kind of income or capital within that paragraph (and for that tax

20

year).

   

“The relevant proportion” is the amount of the transfer divided by

the amount determined under step 1 for that paragraph.

   

Step 3

   

Treat the amount of the transfer as reduced by the amount taken into

25

account under step 2.

   

Step 4

   

If the amount of the transfer (as reduced under step 3) is not nil, start

again at step 2.

   

In step 2, read the reference to the earliest paragraph of the kind

30

mentioned there as a reference to the earliest such paragraph which

has not previously been taken into account under that step in relation

to the transfer.

   

Step 5

   

If the amount of the transfer (as reduced under step 3) is not nil once

35

steps 2 and 3 have been undertaken in relation to all paragraphs of

subsection (4) for which the amount determined under step 1 is not

nil, start again at step 1.

   

In step 1, read the reference to the relevant tax year as a reference to

the tax year immediately before the last tax year for which step 1 has

40

been undertaken in relation to the transfer.

(4)   

The kinds of income and capital are—

(a)   

employment income (other than income within paragraph

(b), (c) or (f)),

(b)   

relevant foreign earnings (other than income within

45

paragraph (f)),

(c)   

foreign specific employment income (other than income

within paragraph (f)),

(d)   

relevant foreign income (other than income within paragraph

(g)),

50

 
 

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Schedule 7 — Remittance basis
Part 1 — Main provisions

163

 

(e)   

foreign chargeable gains (other than chargeable gains within

paragraph (h)),

(f)   

employment income subject to a foreign tax,

(g)   

relevant foreign income subject to a foreign tax,

(h)   

foreign chargeable gains subject to a foreign tax, and

5

(i)   

income or capital not within another paragraph of this

subsection.

(5)   

In subsection (4) “foreign tax” means any tax chargeable under the

laws of a territory outside the United Kingdom.

(6)   

In this section “mixed fund” means money or other property which,

10

immediately before the transfer, contains or derives from—

(a)   

more than one of the kinds of income and capital mentioned

in subsection (4), or

(b)   

income or capital for more than one tax year.

(7)   

References in this section to the amount of the transfer include the

15

market value of it.

809Q    

Section 809P: composition of mixed fund

(1)   

This section applies for the purposes of step 1 of section 809P(3)

(composition of mixed fund).

(2)   

If a mixed fund derives (wholly or in part, and directly or indirectly)

20

from an individual’s income or capital within a relevant paragraph

(and for a tax year), treat the fund as containing that income or

capital if (and to the extent that) it is just and reasonable to do so.

(3)   

If a debt (wholly or in part, and directly or indirectly) in respect of a

mixed fund has been satisfied by—

25

(a)   

an individual’s income or capital within a relevant paragraph

(and for a tax year), or

(b)   

anything deriving (directly or indirectly) from such income

or capital,

   

treat the fund as containing that income or capital if (and to the

30

extent that) it is just and reasonable to do so.

(4)   

In subsections (2) and (3) “relevant paragraph” means any of

paragraphs (a) to (d) of section 809P(4).

(5)   

If section 809P applies in relation to more than one transfer from a

mixed fund, when undertaking step 1 in relation to the second or any

35

subsequent transfer take into account the effect of step 2 of section

809P(3) (composition of transfer) as it applied in relation to each

earlier transfer.

809R    

Sections 809K to 809Q: foreign chargeable gains accruing on disposal

made other than for full consideration

40

(1)   

This section applies if—

(a)   

foreign chargeable gains accrue to an individual on the

disposal of an asset, and

(b)   

the individual does not receive consideration for the disposal

of an amount equal to the market value of the asset.

45

 
 

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Schedule 7 — Remittance basis
Part 1 — Main provisions

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(2)   

For the purposes of sections 809K to 809Q, treat the asset as deriving

from the chargeable gains.

Property treated as not remitted to the United Kingdom

809S    

Money paid to the Commissioners

(1)   

Money that is brought to the United Kingdom by way of one or more

5

direct payments to the Commissioners is to be treated as not remitted

to the United Kingdom—

(a)   

if the payments are made in relation to a tax year to which

section 809G applies, and

(b)   

if, or to the extent that, the payments do not exceed £30,000.

10

(2)   

Subsection (1) does not apply to a payment if, or to the extent that, it

is repaid by the Commissioners.

809T    

Exempt property

(1)   

Exempt property which is brought to, or received or used in, the

United Kingdom in circumstances in which section 809K(2)(a)

15

applies is to be treated as not remitted to the United Kingdom.

(2)   

Subsections (3) to (5) set out the cases in which property is exempt

property.

(3)   

Property is exempt property if it meets the public access rule (which

concerns works of art and collectors’ pieces).

20

(4)   

Clothing, footwear, jewellery and watches that derive from relevant

foreign income are exempt property if they meet the personal use

rule.

(5)   

Property of any description that derives from relevant foreign

income is exempt property if—

25

(a)   

the notional remitted amount is less than £1,000,

(b)   

the property meets the temporary importation rule, or

(c)   

the property meets the repair rule.

809U    

Property that ceases to be exempt property treated as remitted

(1)   

Property that ceases to be exempt property is to be treated as having

30

been remitted to the United Kingdom at the time it ceases to be

exempt property.

(2)   

Property ceases to be exempt property in either of the following

cases.

(3)   

The first case is where the exempt property is sold whilst it is in the

35

United Kingdom.

(4)   

The second case is where the property—

(a)   

is exempt property only because it meets one or more of the

relevant rules,

(b)   

ceases to meet that rule, or all of those rules, whilst it is in the

40

United Kingdom, and

(c)   

does not meet any other relevant rule.

(5)   

In this section “relevant rule” means—

 
 

 
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