809N Section 809L: 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 United Kingdom by virtue of condition C in section 809L.
(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 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.
(5) The individual “makes a gift of” property if the individual disposes of the property—
(a) for no consideration, or
(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 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 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
(c) any other property, but only if it is dealt with as mentioned in section 809L(4)(a), (b) , (ba) or (c) by virtue of an operation which is effected—
(i) with reference to the gift of the property to the gift recipient, or
(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
(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 , a benefit or a service is to be disregarded in any of these cases—
(a) in the case of enjoyment of property or a service, if the property or service is enjoyed virtually to the entire exclusion of all relevant persons,
(aa) in the case of enjoyment of a benefit—
(i) if the qualifying property being dealt with as mentioned in section 809L(4)(a) or (ba) results in a benefit being enjoyed by relevant persons and persons who are not relevant persons, and
(ii) the enjoyment by all relevant persons is no more than negligible,
(b) if full consideration in money or money's worth is given by a relevant person for the enjoyment, or
(c) if the property , benefit 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.
809O Section 809L: 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 809L.
(2) For the purposes of section 809L(5), the question of whether or not the person whose property is dealt with as mentioned in paragraph (a), (b) , (ba) or (c) of section 809L(5) is a relevant person is to be 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 809L(5)(a), (b) , (ba) or (c), means an operation which is effected—
(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,
(b) is made to, or for the benefit of, the person whose property is dealt with as mentioned in section 809L(5)(a), (b) , (ba) 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.
(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 809L(5)(a), (b) , (ba) or (c).
(6) Enjoyment by a relevant person of property , a benefit or a service is to be disregarded in any of these cases—
(a) in the case of enjoyment of property or a service, if the property or service is enjoyed virtually to the entire exclusion of all relevant persons,
(aa) in the case of enjoyment of a benefit—
(i) if the property being dealt with as mentioned in section 809L(5)(a) or (ba) results in a benefit being enjoyed by relevant persons and persons who are not relevant persons, and
(ii) the enjoyment by all relevant persons is no more than negligible,
(b) if full consideration in money or money's worth is given by a relevant person for the enjoyment, or
(c) if the property , benefit 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.
(1) The amount of income or chargeable gains remitted to the United Kingdom is to be determined as follows.
(2) If the property, service or consideration is the income or chargeable gains, the amount remitted is equal to the amount of the income or chargeable gains.
(3) If the property, service 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, service or consideration derives.
(4) If the income or chargeable gains are used as mentioned in section 809L(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 809L(3)(c), the amount remitted is equal to the 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 809L(4)(a) , (b) or (ba), the amount remitted is equal to the amount of the relevant income or chargeable gains.
(7) In a case falling within section 809L(4)(c), the amount remitted is 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 809L(5)(a) , (b) or (ba), the amount remitted is equal to the amount of the income or chargeable gains referred to in section 809O(4)(c).
(9) In a case falling within section 809L(5)(c), the amount remitted is equal to the amount of the income or chargeable gains referred to in section 809O(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 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 809N(7)(a), the 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 809N(7)(b), the income or gains—
(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 809N(7)(c), the income or gains—
(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 that has been charged to income tax or capital gains tax) would otherwise exceed the amount of the income or chargeable gains, the amount remitted is limited to the amount which (when taken together with any amount previously remitted that has been charged to income tax or capital gains tax) is equal to the amount of the income or chargeable gains.
(13) If the property forms part of a set only part of which is in the United Kingdom, the amount remitted is such portion of what it would have been had the complete set been brought to, or received or used in, the United Kingdom when the part was as is just and reasonable (having regard to the part of the set which is there).
809Q Sections 809L and 809P: transfers from mixed funds
(1) This section applies for the purposes mentioned in subsection (2) where condition A in section 809L 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 in part, and directly or indirectly) from such a transfer, is used as mentioned in section 809L(3)(c).
(1A) But this section must be read subject to section 809RA.
(2) The purposes referred to in subsection (1) are—
(a) determining whether condition B in section 809L is met, and
(b) if it is met, determining (under section 809P) the amount of income or chargeable gains remitted.
(3) The extent to which the transfer is of the individual's income or chargeable gains is to be determined as follows.
Step A1
Find the amount (if any) of income or capital of the individual for the relevant tax year in the mixed fund immediately before the transfer that is TRF capital.
If the amount of the transfer is equal to, or less than, the amount of TRF capital, treat the transfer as containing only TRF capital.
Otherwise—
treat so much of the transfer as does not exceed the amount of the TRF capital as being comprised of TRF capital, and
apply the following steps to the remainder of the transfer.
Step 1
For each of the categories of income and capital in paragraphs (a) to (i) of subsection (4), find (applying section 809R) the amount of income or capital of the individual for the relevant tax year in the 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.
If that amount does not exceed the amount of the remainder, treat the remainder as containing the income or capital within that paragraph (and for that tax year).
Otherwise, treat the remainder as containing the relevant proportion of each kind of income or capital within that paragraph (and for that tax year).
“The relevant proportion” is the amount of the remainder divided by the amount determined under step 1 for that paragraph.
Step 3
Treat the amount of the remainder as reduced by the amount taken into account under step 2.
Step 4
If the amount of the remainder (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 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 remainder.
Step 5
If the amount of the remainder (as reduced under step 3) is not nil once 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 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 paragraph (f)),
(c) foreign specific employment income (other than income within paragraph (f)),
(d) relevant foreign income (other than income within paragraph (g)),
(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
(i) income or capital not within another paragraph of this subsection.
(5) In subsection (4) “foreign tax” means any tax chargeable under the law of a territory outside the United Kingdom.
(6) In this section “mixed fund” means money or other property which, immediately before the transfer, contains or derives from—
(a) more than one of the kinds of income and capital mentioned in subsection (4), ...
(b) income or capital for more than one tax year , or
(c) income or capital that is TRF capital and income or capital that is not TRF capital.
(7) References in this section to the amount of the transfer include the market value of it.
(8) References in this section and section 809R to anything deriving from income or capital within paragraph (i) of subsection (4) do not include—
(a) income or gains within any of paragraphs (a) to (h) of that subsection, or
(b) anything deriving from such income or gains.
(9) For the purposes of this Chapter “TRF capital” means any amount that—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) is designated qualifying overseas capital for the purposes of Part 1 of Schedule 10 to FA 2025 (and see paragraph 8(7) of that Schedule which provides for qualifying overseas capital to be treated as designated qualifying overseas capital from the start of the tax year to which the return in which it is designated relates).
(1) Subsections (2) to (8) apply for the purposes of step 1 of section 809Q(3) (composition of mixed fund).
(2) Treat property which derives wholly or in part (and directly or indirectly) from an individual's income or capital for a tax year as consisting of or containing that income or capital.
(3) If a debt relating (wholly or in part, and directly or indirectly) to property is at any time satisfied (wholly or in part) by—
(a) an individual's income or capital for a tax year, or
(b) anything deriving (directly or indirectly) from such income or capital,
from that time treat the property as consisting of or containing the income or capital if and to the extent that it is just and reasonable to do so.
(4) Treat an offshore transfer from a mixed fund as containing the appropriate proportion of each kind of income or capital in the fund immediately before the transfer.
“The appropriate proportion” means the amount (or market value) of the transfer divided by the market value of the mixed fund immediately before the transfer.
(4A) For the purposes of subsection (4)—
(a) TRF capital is to be treated as a kind of income or capital, and
(b) TRF capital is not to be regarded as any other kind of income or capital.
(5) A transfer from a mixed fund is an “offshore transfer” for the purposes of subsection (4) if and to the extent that neither section 809Q nor section 809RZA(2) applies in relation to it.
(6) Treat a transfer from a mixed fund as an “offshore transfer” (and neither section 809Q nor section 809RZA(2) as applying in relation to it, if they otherwise would do) if and to the extent that, at the end of a tax year in which it is made—
(a) neither section 809Q nor section 809RZA(2) applies in relation to it, and
(b) on the basis of the best estimate that can reasonably be made at that time, section 809Q will not apply in relation to it.
(7) In this section ‘mixed fund’ means money or other property containing or deriving from—
(a) more than one of the kinds of income and capital mentioned in section 809Q(4), ...
(b) income or capital for more than one tax year , or
(c) income or capital that is TRF capital and income or capital that is not TRF capital.
(8) If section 809Q applies in relation to part of a transfer, apply that section in relation to that part before applying subsection (4) in relation to the rest of the transfer.
(9) If section 809Q applies in relation to more than one transfer from a mixed fund, when undertaking steps A1 and 1 in relation to the second or any subsequent transfer take into account the effect of steps A1 and 2 of section 809Q(3) (composition of transfer) as it applied in relation to each earlier transfer.
(1) Subsection (2) applies to a transfer made from a mixed fund if—
(a) it is made from a mixed fund that contains TRF capital,
(b) the transfer is to a TRF capital account, and
(c) the amount of the transfer does not exceed the amount of TRF capital in the mixed fund at the time of the transfer.
(2) The transfer is to be treated as a transfer of TRF capital.
(3) Where subsection (2) would apply to a transfer but does not because of paragraph (c) of subsection (1)—
(a) that transfer is to be treated as two separate transfers occurring one immediately after the other, and
(b) the first of those transfers is to be treated as being in the amount of TRF capital in the mixed fund (and accordingly subsection (2) will apply to that deemed transfer but not the second, which may result in the TRF capital account ceasing to be a TRF capital account).
(4) Section 809RZB makes provision about the nomination of an account as a TRF capital account (and see sections 809RZC and 809RZD for the effect of making a transfer that contains amounts that are not TRF capital).
(1) An individual may by notice to the Commissioners nominate an account to be a TRF capital account (and more than one nomination may have effect at any time).
(2) The notice must specify the qualifying date for the account.
(3) “The qualifying date” for the account is the first date on which there is paid into the account sums falling within subsection (4) which (in total) are more than £10 at a time when the credit balance of the account was £10 or less.
(4) A sum falls within this subsection if it is TRF capital.
(5) The individual may withdraw the nomination by giving a further notice to the Commissioners, specifying the date with effect from which the nomination is withdrawn.
(6) A notice under subsection (1) or (5) must be in writing and include such information as the Commissioners may reasonably require.
(7) A notice under subsection (1) or (5) must be given no later than—
(a) 31 January in the tax year following the tax year in which falls, as the case may be—
(i) the qualifying date for the account, or
(ii) the date with effect from which the nomination is withdrawn, or
(b) such later date as the Commissioners may allow.
(8) If an individual nominates an account under this section, the account is a “TRF capital account” of the individual throughout the period—
(a) beginning with the qualifying date, and
(b) ending with the date before the earliest of the following dates—
(i) the date on which the account is closed or ceases to be an ordinary bank account held by and for the benefit of the individual (alone or jointly with others);
(ii) the date with effect from which the nomination is withdrawn under this section;
(iii) 6 April in a tax year in which there is a breach of the TRF deposit rule which is not remedied or cannot be remedied.
(9) The account is not to be a TRF capital account at all if—
(a) at any time on the qualifying date, the account is not an ordinary bank account held by and for the benefit of the individual (alone or jointly with others), or
(b) immediately before the qualifying date, the account has a credit balance of more than £10.
(10) Where the account has a credit balance immediately before the qualifying date (which must be £10 or less), that balance is to be treated as TRF capital for the purposes of this Chapter.
(11) Where interest is payable on TRF capital held in the TRF capital account, any such interest paid into the account is to be treated as TRF capital for the purposes of this Chapter.
(12) The account is not to be a TRF capital account at all if the qualifying date falls in a tax year in which there is a breach of the TRF deposit rule which is not remedied or cannot be remedied.
(13) Subsection (8)(b)(iii) or (12) (as relevant) is to be ignored if the breach occurs on or after a date falling within subsection (8)(b)(i) or (ii).
(14) For the purposes of this section an account is an “ordinary bank account” if it is a cash account in a bank (whether a current or savings account) where sums standing to the credit of the account from time to time represent a debt owed by the bank to the account-holder.
(15) In this section, and in sections 809RZC and 809RZD, a reference to anything “paid into” an account includes anything credited to the account by whatever means.
(1) There is a breach of the TRF deposit rule if one or more prohibited sums are paid into a TRF capital account on the qualifying date or any day after the qualifying date.
(2) A breach of the TRF deposit rule is remedied if, within 30 days beginning with the day on which the prohibited sums are paid into the account, the required amount is transferred out of the account by way of a single one-off qualifying transfer.
(3) A transfer is “qualifying” if it does not result in the remittance of any amount to the United Kingdom.
(4) “The required amount” is an amount equal to the total of the prohibited sums paid into the TRF capital account on the day of the breach.
(5) If there are 2 days in a tax year on which one or more breaches of the TRF deposit rule occur, subsection (2) does not apply to any breach on any subsequent day in the tax year (and accordingly any breach occurring on any day after the second day in the tax year on which there has been a breach cannot be remedied).
(6) A “prohibited sum” is anything other than a sum that is TRF capital.
(1) This section applies if the required amount in relation to a breach of the TRF deposit rule was transferred out of the account in accordance with section 809RZC(2).
(2) Sections 809Q and 809R have effect as if—
(a) the intervening transactions had never taken place, and
(b) each prohibited sum represented by the required amount had instead been transferred directly (at the time that sum was paid into the TRF capital account) into the account or other property into which the required amount was transferred by virtue of the single one-off qualifying transfer.
(3) Each of the following is an “intervening transaction”—
(a) each payment into the TRF capital account of a prohibited sum represented by the required amount, and
(b) the single one-off qualifying transfer out of the TRF capital account.
809RA Special mixed fund rules for certain employment cases
(1) This section applies if—
(a) an individual has general earnings from an employment for a tax year,
(b) those earnings include both general earnings within section 15(1) of ITEPA 2003 (“section 15(1) earnings”) and general earnings within section 26(1) of that Act (“section 26(1) earnings”),
(c) at least some of the section 15(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 15(1) earnings, are paid into an account in that tax year at a time (a “relevant time”) when the account is a qualifying account of the individual, and
(d) at least some of the section 26(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 26(1) earnings, are also paid into the account in that tax year at a relevant time.
(2) If this section applies, the composition of each transfer made from the account in that tax year at a relevant time is to be determined as follows—
Step 1 Suppose that all the condition A transfers made from the account in the tax year at a relevant time had been a single transfer made from the account at the end of the tax year.
Step 2 Suppose that all the other transfers made from the account in the tax year at a relevant time had been a single offshore transfer made at the end of the tax year immediately after the single transfer mentioned in step 1.
Step 3 Applying those suppositions—
find under section 809Q(3) the extent to which the single transfer mentioned in step 1 is of the individual's income or chargeable gains, and
find under section 809R(4) the content of the single offshore transfer mentioned in step 2.
Step 4 Each transfer made from the account in the tax year at a relevant time is to be treated as containing the specified proportion of each kind of income or capital contained in the relevant deemed transfer.“The specified proportion” is the amount of the transfer divided by the amount of the relevant deemed transfer.“The relevant deemed transfer” is—
if the transfer is a condition A transfer, the single transfer mentioned in step 1, and
otherwise, the single offshore transfer mentioned in step 2.
(3) Subsection (2) applies in determining the composition of a transfer for the purposes of sections 809Q and 809R but it does not otherwise affect the date on which a transfer is considered to occur for the purposes of this Chapter.
(4) If the tax year is the tax year in which the account becomes a qualifying account, for the purpose of applying section 809Q(3) in relation to the single transfer mentioned in step 1 of subsection (2), treat the part of the tax year falling before the qualifying date for the account as a separate tax year.
(5) If the account ceases to be a qualifying account of the individual during the tax year other than as a result of a breach of the deposit rule—
(a) subsection (2) has effect as if references to the end of the tax year were to the end of the day on which the account ceases to be a qualifying account, and
(b) for the purpose of applying section 809Q(3) in relation to the single transfer mentioned in step 1 of subsection (2), treat the part of the tax year falling after the day mentioned in paragraph (a) as a separate tax year.
(6) A transfer from the account is a “condition A transfer” if and to the extent that—
(a) condition A in section 809L is met, and
(b) either—
(i) the property or consideration for the service is (wholly or in part), or derives (wholly or in part, and directly or indirectly) from, the transfer, or
(ii) the transfer, or anything deriving (wholly or in part, and directly or indirectly) from the transfer, is used as mentioned in section 809L(3)(c).
(7) A transfer from the account is an “other transfer” if and to the extent that it is not a condition A transfer.
(8) Treat a transfer as an “other transfer” if and to the extent that, at the end of the tax year—
(a) it is not a condition A transfer, and
(b) on the basis of the best estimate that can reasonably be made at that time, it will not become a condition A transfer.
(9) If the account ceases to be a qualifying account of the individual during the tax year other than as a result of a breach of the deposit rule, subsection (8) has effect as if the reference to the end of the tax year were to the end of the day on which the account ceases to be a qualifying account.
(10) “Qualifying account” and “the qualifying date” for an account are defined in section 809RB.
(11) For the purposes of this section and sections 809RB to 809RD—
(a) “employment” is to be read in accordance with section 4(1) of ITEPA 2003, and includes an office (as read in accordance with section 5(3) of that Act),
(b) whether general earnings are “for” a tax year is to be determined as for the purposes of the employment income Parts of ITEPA 2003 (see section 3(2) of that Act),
(c) a reference to anything “paid into” an account includes anything credited to the account by whatever means, and
(d) references to a breach of the deposit rule are to be read in accordance with section 809RC.
(1) An individual may by notice to the Commissioners nominate an account to be a qualifying account of the individual for the purposes of section 809RA.
(2) The notice must specify the qualifying date for the account.
(3) “The qualifying date” for the account is the first date on which there is paid into the account sums falling within subsection (4) which (in total) are more than £10.
(4) A sum falls within this subsection if it is, or derives wholly (whether directly or indirectly) from, general earnings of the individual from an employment for a tax year which is a relevant tax year in relation to the employment.
(5) A tax year is a “relevant” tax year in relation to an employment if the general earnings which the individual has for the tax year from the employment include both general earnings within section 15(1) of ITEPA 2003 and general earnings within section 26(1) of that Act.
(6) The individual may withdraw the nomination by giving a further notice to the Commissioners, specifying the date with effect from which the nomination is withdrawn.
(7) A notice under subsection (1) or (6) must be in writing and include such information as the Commissioners may reasonably require.
(8) A notice under subsection (1) or (6) must be given no later than—
(a) 31 January in the tax year following the tax year in which falls, as the case may be—
(i) the qualifying date for the account, or
(ii) the date with effect from which the nomination is withdrawn, or
(b) such later date as the Commissioners may allow.
(9) If an individual nominates an account under this section, the account is a “qualifying account” of the individual throughout the period—
(a) beginning with the qualifying date, and
(b) ending with the date before the earliest of the following dates—
(i) the date on which the account is closed or ceases to be an ordinary bank account held by and for the benefit of the individual (alone or jointly with others);
(ii) the date with effect from which the nomination is withdrawn under this section;
(iii) the qualifying date for another qualifying account of the individual;
(iv) 6 April in a tax year in which there is a breach of the deposit rule which is not remedied or cannot be remedied;
(v) 6 April in a tax year for which the individual has no general earnings within section 26(1) of ITEPA 2003.
(10) The account is not to be a qualifying account at all if—
(a) at any time on the qualifying date, the account is not an ordinary bank account held by and for the benefit of the individual (alone or jointly with others), or
(b) immediately before the qualifying date, the account has a credit balance of more than £10.
(11) The account is not to be a qualifying account at all if the qualifying date falls in a tax year—
(a) for which the individual has no general earnings within section 26(1) of ITEPA 2003, or
(b) in which there is a breach of the deposit rule which is not remedied or cannot be remedied.
(12) Subsection (9)(b)(iv) or (11)(b) (as relevant) is to be ignored if the breach occurs on or after a date falling within subsection (9)(b)(i) to (iii).
(13) If, apart from this subsection, an individual might have nominated two or more accounts for which the qualifying date would be the same, the individual may nominate only one of those accounts.
(14) If, apart from this subsection, an account would be a qualifying account of two or more individuals at any time, it is not to be a qualifying account of either or any of them at that time or any other time.
(15) For the purposes of this section an account is an “ordinary bank account” if it is a cash account in a bank (whether a current or savings account) where sums standing to the credit of the account from time to time represent a debt owed by the bank to the account-holder.
(1) There is a breach of the deposit rule if a prohibited sum is paid into the account on or after the qualifying date.
(2) A breach of the deposit rule is remedied if, within 30 days beginning with the day on which the individual became or ought reasonably to have become aware of the payment of the prohibited sum, the required amount is transferred out of the account by way of a single one-off transfer.
(3) “The required amount” is an amount equal to—
(a) the prohibited sum, plus
(b) all the other prohibited sums (if any) that have been paid into the account since that sum was paid in.
(4) If there are 3 breaches of the deposit rule in any 12 month period, subsection (2) does not apply to the third breach and, accordingly, the third breach cannot be remedied.
(5) The payment of a prohibited sum (“the later prohibited sum”) into the account does not result in a breach of the deposit rule if—
(a) a breach resulting from an earlier payment of a prohibited sum into the account is remedied, and
(b) the later prohibited sum is represented by the required amount in relation to that breach.
(6) A “prohibited sum” is anything other than a sum that is, or derives wholly (whether directly or indirectly) from, any of the following kinds of income or capital—
(a) general earnings of the individual from an employment for a tax year which is a relevant tax year in relation to the employment,
(b) general earnings of the individual from an employment which consist of money and are paid in a tax year which is a relevant tax year in relation to the employment,
(c) an amount of specific employment income which, by virtue of Part 6, 7 or 7A of ITEPA 2003 or any other enactment, counts as employment income of the individual in respect of an employment for a tax year which is a relevant tax year in relation to the employment,
(d) interest on the account, or
(e) consideration for the disposal of employment-related securities or employment-related securities options in the circumstances described in subsection (7).
(7) The circumstances are—
(a) the securities or options were acquired pursuant to a right or opportunity available by reason of an employment of the individual,
(b) the disposal is or occurs in conjunction with, or as soon as reasonably practicable after, a relevant event involving those securities or options, and
(c) the tax year in which the relevant event occurs is a relevant tax year in relation to the employment.
(8) For the purposes of subsection (7) each of the following is a “relevant event”—
(a) the acquisition mentioned in subsection (7)(a), and
(b) any event on the occurrence of which an amount (if positive) counts as employment income by virtue of Part 7 of ITEPA 2003 or would do so but for—
(i) section 421E or 474 of that Act (exclusions: residence etc), or
(ii) an election under section 430 or 431 of that Act.
(9) For the purposes of this section a tax year is a “relevant” tax year in relation to an employment if—
(a) the individual has general earnings from the employment for the tax year,
(b) those earnings include both general earnings within section 15(1) of ITEPA 2003 (“section 15(1) earnings”) and general earnings within section 26(1) of that Act (“section 26(1) earnings”),
(c) at least some of the section 15(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 15(1) earnings, are paid into the account in the tax year, and
(d) at least some of the section 26(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 26(1) earnings, are also paid into the account in the tax year.
(10) For the purposes of this section—
(a) “employment-related securities” has the meaning given in section 421B(8) of ITEPA 2003, and
(b) “employment-related securities options” has the meaning given in section 471(5) of that Act.
(1) This section applies if the required amount in relation to a breach of the deposit rule was transferred out of the account in accordance with section 809RC(2).
(2) Sections 809Q and 809R have effect as if—
(a) the intervening transactions had never taken place, and
(b) each prohibited sum represented by the required amount had instead been transferred directly (at the time that sum was paid into the qualifying account) into the account or other property into which the required amount was transferred by virtue of the single one-off transfer.
(3) Each of the following is an “intervening transaction”—
(a) each payment into the qualifying account of a prohibited sum represented by the required amount, and
(b) the single one-off transfer out of the qualifying account.
(4) If it is supposed under step 1 or 2 of section 809RA(2) that a single transfer had been made in the intervening period, re-apply section 809Q or 809R in relation to that transfer taking account of subsection (2).
(5) “The intervening period” is the period—
(a) beginning with the day on which the breach occurred, and
(b) ending with the day on which the single one-off transfer was made in accordance with section 809RC(2).
(6) If more than one transfer of a sum equal to the required amount was transferred out of the qualifying account within the 30-day grace period, the first of those transfers is assumed to be the single one-off transfer.
(7) “The 30-day grace period” is the period of 30 days mentioned in section 809RC(2).
(1) This section applies if, by reason of an arrangement the main purpose (or one of the main purposes) of which is to secure an income tax advantage or capital gains tax advantage, a mixed fund would otherwise be regarded as containing income or capital within any of paragraphs (f) to (i) of section 809Q(4).
(2) Treat the mixed fund as containing so much (if any) of the income or capital as is just and reasonable.
(3) “Arrangement” includes any scheme, understanding, transaction or series or transactions (whether or not enforceable).
(4) Income tax advantage” means—
(a) a relief from income tax or increased relief from income tax,
(b) a repayment of income tax or increased repayment of income tax,
(c) the avoidance or reduction of a charge to income tax or an assessment to income tax, or
(d) the avoidance of a possible assessment to income tax;
...
(4A) For the purposes of subsection (4)(c) and (d) it does not matter whether the avoidance or reduction is effected—
(a) by receipts accruing in such a way that the recipient does not pay or bear income tax on them, or
(b) by a deduction in calculating profits or gains.
(5) “Capital gains tax advantage” means—
(a) a relief from capital gains tax or increased relief from capital gains tax,
(b) a repayment of capital gains tax or increased repayment of capital gains tax,
(c) the avoidance or reduction of a charge to capital gains tax or an assessment to capital gains tax, or
(d) the avoidance of a possible assessment to capital gains tax.
809T Foreign chargeable gains accruing on disposal made otherwise than for full consideration
(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 at least equal to the market value of the asset.
(2) For the purposes of this Chapter treat the asset as deriving from the chargeable gains.
809U Deemed income or gains not to be regarded as remitted before time when they are treated as arising or accruing
Where—
(a) income or foreign chargeable gains are treated as arising or accruing, and
(b) by virtue of anything done in relation to anything regarded as deriving from the income or chargeable gains, the income or chargeable gains would otherwise be regarded as remitted to the United Kingdom before the time when they are treated as arising or accruing,
treat the income or chargeable gains as remitted to the United Kingdom at that time.
(1) Subsection (2) applies to income or chargeable gains of an individual if—
(a) the income or gains would (but for subsection (2)) be regarded as remitted to the United Kingdom by virtue of the bringing of money to the United Kingdom,
(b) the money is brought to the United Kingdom by way of direct payments to the Commissioners on account of income tax,
(c) the tax year (“tax year 2”) in respect of which the payments on account are made is a tax year for which section 809H (remittance basis charge for long-term UK resident) does not apply as respects the individual, and
(d) that section applied as respects the individual for the previous tax year (“tax year 1”).
(2) The relevant amount of income or chargeable gains is to be treated as not remitted to the United Kingdom if money equal to the relevant amount is taken offshore by—
(a) the 15 March following the end of tax year 2, or
(b) such later date as the Commissioners may allow on a claim made by the individual.
(3) A claim under subsection (2)(b)—
(a) may be made only if the individual has made and delivered a return under section 8 of TMA 1970 for tax year 2 and reasonably expects to receive from the Commissioners a repayment of tax paid in respect of that tax year, and
(b) may be made no later than the 5 April following the end of tax year 2.
(4) Money that is taken offshore in accordance with subsection (2) is to be treated as having the same composition of kinds of income and capital as the money used to make the payments on account.
(5) In this section “the relevant amount” means the lower of the following—
(a) the amount brought to the United Kingdom as mentioned in subsection (1)(b), and
(b) the applicable amount (as defined in section 809H) for tax year 1.
(1) Subsection (2) applies to income or chargeable gains of an individual if—
(a) the income or gains would (but for subsection (2)) be regarded as remitted to the United Kingdom by virtue of the bringing of money to the United Kingdom,
(b) the money is brought to the United Kingdom by way of one or more direct payments to the Commissioners, and
(c) the payments are made in relation to a tax year to which section 809H applies as regards the individual.
(2) The income or chargeable gains are to be treated as not remitted to the United Kingdom to the extent that the payments do not exceed the applicable amount (as defined in section 809H).
(3) Subsection (2) does not apply to payments if or to the extent that they are repaid by the Commissioners.
809VA Money or other property used to make investments
(1) Subsection (2) applies if—
(a) a relevant event occurs,
(b) but for subsection (2), income or chargeable gains of an individual would be regarded as remitted to the United Kingdom by virtue of that event, and
(c) the individual makes a claim for relief under this section.
(2) The income or gains are to be treated as not remitted to the United Kingdom.
(3) A “relevant event” occurs if money or other property—
(a) is used by a relevant person to make a qualifying investment, or
(b) is brought to or received in the United Kingdom in order to be used by a relevant person to make a qualifying investment.
(4) Subsection (1)(b) includes a case where income or gains would be treated under section 809Y as remitted to the United Kingdom by virtue of the relevant event.
(5) Subsection (2) applies by virtue of subsection (3)(b) to the extent only that the investment is made within the period of 45 days beginning with the day on which the money or other property is brought to or received in the United Kingdom.
(6) Where some but not all of the money or other property is used to make the investment within that 45-day period, the part of the income or gains to which subsection (2) applies is to be determined on a just and reasonable basis.
(7) Subsection (2) does not apply if the relevant event occurs, or the investment is made, as part of or as a result of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(8) A claim for relief under this section must be made on or before the first anniversary of the 31 January following the tax year in which the income or gains would, but for subsection (2), be regarded as remitted to the United Kingdom by virtue of the relevant event.
(1) This section applies to any portion of the income or gains to which section 809VA(2) does not apply because the investment was not made within the period mentioned in section 809VA(5) (“the 45-day period”).
(2) That portion is to be treated as not remitted to the United Kingdom to the extent that the remaining money or other property is taken offshore within the 45-day period.
(3) Where some but not all of the remaining money or other property is taken offshore within the 45-day period, the part of the income or gains to which subsection (2) applies is to be determined on a just and reasonable basis.
(4) If any remaining money or other property is taken offshore within the 45-day period, nothing in subsection (2) prevents anything subsequently done in relation to it (or anything deriving from it) from counting as a remittance of the underlying income or gains to the United Kingdom at the time when the thing is subsequently done.
(5) A reference to the “remaining” money or other property is to so much of the money or other property brought to or received in the United Kingdom as is not used within the 45-day period to make the investment (which may in some cases be all of it).
(1) For the purposes of section 809VA, a person makes an investment if—
(a) shares in a company are issued to or acquired by the person, or
(b) the person makes a loan (secured or unsecured) to a company.
(2) The company is referred to as “the target company”.
(3) The shares or the person's rights under the loan (or both) forming the subject of the investment are referred to as “the holding”.
(4) The investment counts as a “qualifying investment” if —
(a) the investment is made before 6 April 2028,
(b) none of the money or other property used to make the investment is TRF capital, and
(c) conditions A and B are met when the investment is made.
(5) Conditions A and B are defined in sections 809VD and 809VF.
(6) A reference in this section to “shares” includes any securities.
(7) If a loan agreement authorises a company to draw down amounts of a loan over a period of time—
(a) entry into the agreement does not count for the purposes of this section as the making of a loan, but
(b) a separate loan is to be treated as made each time an amount is drawn down under the agreement.
(8) Accordingly—
(a) a separate investment is treated as made each time an amount is drawn down under the agreement, and
(b) the reference in subsection (3) to the person's rights under the loan applies only to so much of the person's rights as relate to the drawdown of that particular amount.
(1) Condition A is that the target company is—
(a) an eligible trading company,
(b) an eligible stakeholder company, ...
(ba) an eligible hybrid company, or
(c) an eligible holding company.
(2) A company is an “eligible trading company” if—
(a) it is a private limited company,
(b) it carries on one or more commercial trades or is preparing to do so within the next 5 years, and
(c) carrying on commercial trades is all or substantially all of what it does (or of what it is reasonably expected to do once it begins trading).
(3) A company is an “eligible stakeholder company” if—
(a) it is a private limited company,
(b) it exists wholly for the purpose of making investments in eligible trading companies (ignoring any minor or incidental purposes), and
(c) it holds one or more such investments or is preparing to do so within the next 5 years.
(3A) A company is an “eligible hybrid company” if—
(a) it is a private limited company,
(b) it is not an eligible trading company or an eligible stakeholder company,
(c) it carries on one or more commercial trades or is preparing to do so within the next 5 years,
(d) it holds one or more investments in eligible trading companies or is preparing to do so within the next 5 years, and
(e) carrying on commercial trades and making investments in eligible trading companies are all or substantially all of what it does (or of what it is reasonably expected to do once it begins operating).
(4) The references in subsections (3) and (3A) to making investments is to be read in accordance with section 809VC.
(5) A company is an “eligible holding company” if—
(a) it is a member of an eligible trading group or of an eligible group that is reasonably expected to become an eligible trading group within the next 5 years,
(b) an eligible trading company in the group is a 51% subsidiary of it, and
(c) if the ordinary share capital that it owns in the eligible trading company is owned indirectly, each intermediary in the series is also a member of the group.
(6) “Group” means a parent company and its 51% subsidiaries.
(7) “Parent company” means a company that—
(a) has one or more 51% subsidiaries, but
(b) is not itself a 51% subsidiary of any company.
(8) A group is an “eligible group” if the parent company and each of its 51% subsidiaries are private limited companies.
(9) A group is an “eligible trading group” if—
(a) it is an eligible group, and
(b) carrying on commercial trades is all or substantially all of what the group does (taking the activities of its members as a whole).
(10) The reference in subsection (5) to owning ordinary share capital indirectly is to be read in accordance with section 1155 of CTA 2010.
(11) A company is a “private limited company” if—
(a) it is a body corporate whose liability is limited,
(b) it is not a limited liability partnership, and
(c) none of its shares are listed on a recognised stock exchange.
(1) Section 809VD is to be read in accordance with this section.
(2) A reference to a “trade” also includes—
(a) anything that is treated for corporation tax purposes as if it were a trade, and
(b) a business carried on for generating income from land (as defined in section 207 of CTA 2009).
(3) A trade is a “commercial trade” if it is conducted on a commercial basis and with a view to the realisation of profits.
(4) The carrying on of activities of research and development from which it is intended that a commercial trade will be derived, or will benefit, is to be treated as the carrying on of a commercial trade.
(5) But preparing to carry on activities within subsection (4) is not to be treated as the carrying on of a commercial trade.
(6) A company which is a partner in a partnership is not to be regarded as carrying on a trade carried on by the partnership.
(1) Condition B is that no relevant person has (directly or indirectly) obtained or become entitled to obtain any related benefit, and no relevant person expects to obtain any such benefit.
(2) A “benefit”—
(a) includes the provision of anything that would not be provided to the relevant person in the ordinary course of business, or would be provided but on less favourable terms, but
(b) does not include the provision of anything provided to the relevant person in the ordinary course of business and on arm's length terms.
(3) A benefit is “related” if—
(a) it is directly or indirectly attributable to the making of the investment (whether it is obtained before or after the investment is made), or
(b) it is reasonable to assume that the benefit would not be available in the absence of the investment.
(4) For the purposes of subsection (2)—
(a) a reference to the provision of anything is to the provision of anything in money or money's worth, including property, capital, goods or services of any kind, and
(b) “provision” includes any arrangement that allows a person to enjoy or benefit from the thing in question (whether temporarily or permanently).
809VG Income or gains treated as remitted following certain events
(1) Subsection (2) applies if—
(a) income or chargeable gains are treated under section 809VA(2) as not remitted to the United Kingdom as a result of a qualifying investment,
(b) a potentially chargeable event occurs after the investment is made, and
(c) the appropriate mitigation steps are not taken within the grace period allowed for each step.
(2) The affected income or gains are to be treated as having been remitted to the United Kingdom immediately after the end of the relevant grace period.
(3) Where the step required by section 809VI(2)(a) is not taken within the grace period allowed for that step, “the relevant grace period” is the grace period allowed for that step.
(4) Otherwise, “the relevant grace period” is the grace period allowed for the step required by section 809VI(1) or (2)(b).
(5) “The affected income or gains” means such portion of the income or gains mentioned in subsection (1)(a) as reflects the portion of the investment affected by the potentially chargeable event.
(6) The portion of the investment affected is—
(a) if the potentially chargeable event is a disposal of a part of the holding (or a part of the remaining holding), a portion equal to the portion of the holding (or remaining holding) being disposed of, and
(b) otherwise, the whole of the investment.
(6A) Where—
(a) the income or gains mentioned in subsection (1)(a) include amounts designated as TRF capital (in a tax year after the tax year in which the investment is made), and
(b) the portion of the investment affected is less than the whole of the investment,
so much of the affected income or gains as does not exceed the amounts designated is to be treated as being comprised of the TRF capital.
(6B) Where section 809VO (investments made from mixed funds) applies, subsection (8) of that section applies for the purposes of determining the composition of the amount of the affected income or gains that is not treated as being comprised of TRF capital (referred to as the “relevant affected income and gains” in that subsection) as a result of—
(a) subsection (6A) of this section not applying, or
(b) that subsection only applying to a part of the affected income or gains.
(7) Section 809VN (order of disposals etc) makes further provision for the purposes of this section.
(8) If a qualifying investment is made using the money or other property mentioned in section 809VA(3) together with other funds—
(a) that investment is to be treated as two separate investments, one made using the money or other property mentioned in section 809VA(3) and one made using the other funds, and
(b) references in the business investment provisions to “the investment” and “the holding” relate only to the investment made using the money or other property mentioned in section 809VA(3).
(9) If the potentially chargeable event mentioned in subsection (1)(b) is not the first such event to affect the investment, the income or gains mentioned in subsection (1)(a) do not include, as respects that investment—
(a) any part already treated under subsection (2) as remitted to the United Kingdom as a result of an earlier event,
(aa) any part contained in amounts already treated as remitted under section 809VIA(4) following an earlier event,
(b) any part contained in amounts already taken offshore or re-invested by way of appropriate mitigation steps following an earlier event, or
(c) any part contained in amounts already used to make a tax deposit without which an amount mentioned in paragraph (b) would not have been enough to satisfy section 809VI(1) or (2)(b) (see section 809VK).
(1) For the purposes of section 809VG, a “potentially chargeable event” occurs if—
(a) the target company is for the first time neither an eligible trading company nor an eligible stakeholder company nor an eligible hybrid company nor an eligible holding company,
(b) the relevant person who made the investment (“P”) disposes of all or part of the holding,
(c) the extraction of value rule is breached, or
(d) the 5-year start-up rule is breached.
(2) The extraction of value rule is breached if—
(a) value (in money or money's worth) is received by or for the benefit of P or another relevant person,
(b) the value is received from any person in circumstances that are directly or indirectly attributable to the investment, and
(c) the value is received other than by virtue of a disposal that is itself a potentially chargeable event.
(3) But the extraction of value rule is not breached merely because a relevant person receives value that—
(a) is treated for income tax or corporation tax purposes as the receipt of income or would be so treated if that person were liable to such tax, and
(b) is paid or provided to the person in the ordinary course of business and on arm's length terms.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) The 5-year start-up rule is breached if—
(a) immediately after the end of the period of 5 years beginning with the day on which the investment was made, the target company is non-operational, or
(b) at any time after the end of that period, the target company becomes non-operational.
(6) The target company is “non-operational” at any time when—
(a) it is an eligible trading company but is not trading,
(b) it is an eligible stakeholder company but—
(i) it holds no investments in eligible trading companies, or
(ii) none of the eligible trading companies in which it holds investments is trading, ...
(ba) it is an eligible hybrid company but is not trading and—
(i) it holds no investments in eligible trading companies, or
(ii) none of the eligible trading companies in which it holds investments is trading, or
(c) it is an eligible holding company but—
(i) the group of which it is a member is not an eligible trading group, or
(ii) none of its 51% subsidiaries in the eligible trading group of which it is a member is an eligible trading company that is trading.
(7) In subsection (6), “trading” means carrying on one or more commercial trades (including the carrying on of any activities treated under section 809VE(4) as the carrying on of a commercial trade).
(8) If consideration for a disposal of all or part of the holding is or is to be paid in instalments, the disposal is to be treated for the purposes of this section as if it were separate disposals, one for each instalment (and each giving rise to a separate potentially chargeable event).
(9) An event listed in subsection (1) does not count as a potentially chargeable event if it is due to an insolvency step taken for genuine commercial reasons (but this does not prevent the extraction of any value in connection with the insolvency step from counting as a potentially chargeable event).
(10) For the purposes of subsection (9), an insolvency step is taken if—
(a) the target company enters into administration or receivership or is wound up or dissolved,
(b) the target company is an eligible stakeholder company or an eligible hybrid company and any eligible trading company in which it holds an investment enters into administration or receivership or is wound up or dissolved,
(c) the target company is an eligible holding company and any eligible trading company in the group that is a 51% subsidiary of it enters into administration or receivership or is wound up or dissolved, or
(d) a similar step is taken in relation to a company mentioned in paragraph (a), (b) or (c) under the law of a country or territory outside the United Kingdom.
(1) If the potentially chargeable event is a disposal of all or part of the holding, the appropriate mitigation steps are regarded as taken if the whole of the disposal proceeds have been taken offshore or re-invested.
(2) For any other case, the appropriate mitigation steps are regarded as taken if—
(a) P has disposed of the entire holding (or so much of it as P retains when the potentially chargeable event occurs), and
(b) the whole of the disposal proceeds have been taken offshore or re-invested.
(3) But —
(a) see also section 809VIA (which makes provision treating the disposal proceeds as reduced where TRF capital is involved), and
(b) if the disposal proceeds exceed X, subsections (1) and (2)(b) apply only to so much of the proceeds as is equal to X.
(4) “X” is—
(a) the sum originally invested, less
(b) so much of that sum as has, on previous occasions involving the same investment—
(i) been taken into account in determining the affected income or gains under section 809VG(2),
(ii) been taken offshore or re-invested in order to avoid the application of that section, or
(iii) been used to make a tax deposit without which the amount actually taken offshore or re-invested would not have been enough to satisfy subsection (1) or (2)(b) (see section 809VK).
(5) “The sum originally invested” means the amount of the money, or the market value of the other property, used to make the investment.
(6) Market value is to be assessed for these purposes as at the date of the relevant event (see section 809VA).
(7) Proceeds are “re-invested” if a relevant person uses them to make another qualifying investment (or the proceeds are themselves a qualifying investment) whether in the same or a different company.
(8) In cases where a breach of the extraction of value rule occurs in connection with the winding-up or dissolution of the target company—
(a) subsection (2)(a) does not apply,
(b) the reference in subsection (2)(b) to the disposal proceeds is to the value received, and
(c) references in this section and in succeeding provisions of the business investment provisions to the disposal proceeds are to be read as references to the value received.
809VIA Application of appropriate mitigation steps where TRF capital involved
(1) This section applies in relation to a potentially chargeable event where, if no appropriate mitigation steps were regarded as taken, an amount of TRF capital would (ignoring this section) be treated as remitted to the United Kingdom immediately after the end of the relevant grace period as a result of section 809VG(2).
(2) Where there has been a disposal of all or part of the holding (see section 809VI(1) or (2)(b)), so much of the proceeds of that disposal as are equal to that amount of TRF capital is to be regarded as comprising that TRF capital.
(3) Section 809VI has effect as if references in that section to the disposal proceeds did not include the TRF capital.
(4) Unless section 809VG(2) applies in relation to the potentially chargeable event, the TRF capital is to be treated as remitted to the United Kingdom at the time the potentially chargeable event occurred.
809VJ The grace period allowed for the appropriate mitigation steps
(1) The grace period allowed for the step mentioned in section 809VI(2)(a) is the period of 90 days beginning—
(a) if the potentially chargeable event is a breach of the extraction of value rule, with the day on which the value is received, and
(b) otherwise, with the day on which a relevant person first became aware or ought reasonably to have become aware of the potentially chargeable event.
(2) The grace period allowed for the step mentioned in section 809VI(1) and (2)(b) is the period of 45 days beginning with the day on which the disposal proceeds first became available for use by or for the benefit of P or any other relevant person.
(2A) But subsection (2B) applies instead of subsections (1) and (2) where the potentially chargeable event is a breach of the 5-year start-up rule by virtue of section 809VH(5)(b).
(2B) The grace period allowed for the steps mentioned in section 809VI(2)(a) and (2)(b) is the period of 2 years beginning with the day on which a relevant person first became aware or ought reasonably to have become aware of the potentially chargeable event referred to in subsection (2A).
(3) An officer of Revenue and Customs may agree in a particular case to extend the grace period allowed for an appropriate mitigation step in exceptional circumstances.
(4) An officer of Revenue and Customs may agree in a particular case to extend the grace period allowed for an appropriate mitigation step in circumstances specified in regulations made by the Commissioners.
(5) Regulations under subsection (4) may have effect in relation to investments made before the day on which the regulations are made.
(6) Nothing in subsection (4) or in regulations made under it limits the power conferred by subsection (3).
(7) The powers conferred on officers of Revenue and Customs by subsections (3) and (4) include power to agree to extend a grace period for a length of time that is indefinite but is capable of becoming definite by means identified in the agreement (such as the satisfaction of conditions).
(1) This section applies if—
(a) there is a disposal of all or part of the holding,
(b) the disposal counts as a potentially chargeable event or is part of the appropriate mitigation steps taken in consequence of a potentially chargeable event,
(c) a chargeable gain (but not a loss) accrues to P on the disposal,
(d) P is chargeable to capital gains tax (but not corporation tax) in respect of that gain, and
(e) the actual disposal proceeds are less than Y.
(2) The difference between the actual disposal proceeds and Y is referred to in this section as “the shortfall”.
(3) “The actual disposal proceeds” means the disposal proceeds but disregarding section 809Z8(4).
(4) “Y” is the sum of—
(a) the amount (if any) that would, but for this section, be required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b), and
(b) the amount found by applying the highest potential CGT rate to the amount (computed in accordance with TCGA 1992) of the chargeable gain accruing to P on the disposal.
(5) The highest potential CGT rate is the highest rate specified in section 1H of TCGA 1992 (regardless of the type of the chargeable gain or, if P is an individual, the rate of income tax at which P's income is chargeable).
(6) If this section applies, the amount that is required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b) is reduced by the permitted amount.
(7) “The permitted amount” is so much of the shortfall as is used, within the grace period allowed for taking the disposal proceeds offshore or re-investing them, to make a deposit in respect of which a certificate of tax deposit is issued to P under section 12 of the National Loans Act 1968.
(8) A reduction may not be made under subsection (6) unless—
(a) when details of the deposit are confirmed to Her Majesty's Revenue and Customs, the confirmation letter states that this section is intended to apply to the deposit, and
(b) the amount of the deposit is no greater than the shortfall.
809VL Effect of taking appropriate mitigation steps within grace period
(1) This section explains the effect for the purposes of this Chapter in cases where section 809VG(2) does not apply because the appropriate mitigation steps were taken within the grace period allowed for each step.
(2) If disposal proceeds were taken offshore as part of those steps, nothing in section 809VA(2) prevents anything subsequently done in relation to those proceeds (or anything deriving from them) from counting as a remittance of the underlying income or gains to the United Kingdom at the time when the thing is subsequently done.
(3) If disposal proceeds were re-invested as part of those steps—
(a) the underlying income or gains continue to be treated under section 809VA(2) as not remitted to the United Kingdom, and
(b) the business investment provisions apply to the re-investment as they apply to the original investment.
(4) In the application of the business investment provisions to the re-investment—
(a) treat the potentially chargeable event mentioned in section 809VG(1)(b) as the relevant event,
(b) treat the underlying income or gains as the income or gains treated under section 809VA(2) as not remitted to the United Kingdom as a result of the re-investment, and
(c) treat the amount used to make the re-investment as the sum originally invested.
(5) If the re-investment is made using more than the minimum amount of disposal proceeds required to satisfy section 809VI(1) or (2)(b)—
(a) that investment is to be treated as two separate investments, one made using the minimum amount of disposal proceeds and one made using the excess, and
(b) references in the business investment provisions to “the investment” and “the holding” relate only to the investment made using the minimum amount of disposal proceeds.
(6) “The underlying income or gains” means the affected income or gains (within the meaning of section 809VG) or, if one part of the disposal proceeds is taken offshore and the other part re-invested, a corresponding proportion of the affected income or gains.
(7) A further claim must be made in accordance with section 809VA in respect of the re-investment and, if no such claim is made on or before the first anniversary of the 31 January following the tax year in which the re-investment was made, section 809VG(2) applies, as respects the original investment, as if the appropriate mitigation steps had not been taken within the grace period allowed for each step.
(8) Section 809VM makes further provision in cases involving a tax deposit.
(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.
(1) Subsection (2) applies if at any time income or chargeable gains of an individual are treated under section 809VA as not remitted to the United Kingdom as a result of—
(a) more than one qualifying investment made in the same target company,
(b) more than one qualifying investment made in companies in the same eligible trading group, or
(c) qualifying investments made in an eligible trading company and in an eligible stakeholder company or eligible hybrid company that holds investments in that trading company.
(2) In the application of section 809VG at that time—
(a) treat the investments and holdings as if they were a single qualifying investment and a single holding, and
(b) assume that a disposal of all or part of that deemed single holding affects the deemed single investment in the following order.
(2A) The order is—
(a) so much of the qualifying investments as were made using money or other property that is designated as TRF capital (in a tax year after the tax year in which the investment is made) to the extent those qualifying investments were made using that money or other property, and then
(b) in relation to whatever remains, the order in which the qualifying investments were made (that is to say, on a first in, first out basis).
(3) Subsection (4) applies if at any time—
(a) income or chargeable gains of an individual are treated under section 809VA as not remitted to the United Kingdom as a result of one or more qualifying investments,
(b) in addition to that investment or those investments, a relevant person holds at least one other investment in the same target company, the same eligible trading group or a related eligible company, and
(c) that other investment is not a qualifying investment.
(4) In the application of section 809VG at that time—
(a) treat the investments and holdings as if they were a single investment and a single holding, and
(b) assume that a disposal of all or part of that deemed single holding is—
(i) a disposal of so much of the deemed single holding as is from any qualifying investments that were made using money or other property that is designated as TRF capital (in a tax year after the tax year in which the investment is made) to the extent those qualifying investments were made using that money or other property, and
(ii) if any of the deemed single holding remains after the disposal referred to in sub-paragraph (i), a disposal of a holding from qualifying investments until the holdings from all the qualifying investments have been disposed of.
(5) The reference to a “related eligible company”—
(a) in relation to an eligible trading company, is to an eligible stakeholder company or eligible hybrid company that holds investments in that company, and
(b) in relation to an eligible stakeholder company or eligible hybrid company, is to an eligible trading company in which that company holds investments.
(6) Subsections (2) and (4) apply whether the investments in question are held by the same relevant person or different ones.
(1) This section applies if—
(a) but for section 809VA(2), income or gains would have been remitted to the United Kingdom by virtue of a relevant event, and
(b) section 809Q (transfers from mixed funds) would have applied in determining the amount that would have been so remitted.
(2) The relevant event counts as an offshore transfer for the purposes of section 809R(4).
(3) The holding is to be treated as containing a proportion of each kind of income and capital contained in the invested property equal to the fixed proportion.
(4) The “fixed proportion” is, unless subsection (4B) applies, the proportion of that kind of income or capital contained in the invested property by virtue of subsection (2).
(4A) Subsection (4B) applies, instead of subsection (3), for determining the composition of the holding in connection with the application of subsections (7) and (8) where the holding contains TRF capital (as a result of the designation of income or capital in the holding as TRF capital in the tax year after the tax year in which the relevant event occurred).
(4B) Where this subsection applies, take the following steps to determine the composition of the holding in connection with the application of those subsections—
Step 1
Determine the amounts of each kind of income and capital that the holding was treated as containing by virtue of subsection (3).
Step 2
Reduce the amount of each kind of income and capital by the amount (if any) of that income or capital as is TRF capital.
(4C) Where subsection (4B) applies, the “fixed proportion” is the proportion of that kind of income or capital treated as contained in the invested property by virtue of that subsection (instead of subsection (2)).
(5) “The invested property” means the money or other property used to make the investment.
(6) Subsection (7) applies in cases where—
(a) section 809VG(2) does not apply because an amount is taken offshore, re-invested or used to make a tax deposit, or
(b) section 809VM(4) does not apply because an amount is taken offshore or re-invested.
(7) The amount taken offshore, re-invested or used to make a tax deposit is treated, immediately after that step, as containing the fixed proportion (determined under subsection (4) or (4C) as the case may be) of each kind of income and capital contained in the holding.
(8) In cases where section 809VG(2) applies—
(a) the relevant affected income or gains are so much of the fixed amount of each kind of income or gain mentioned in subsection (1)(a) as reflects the relevant proportion of the portion of the investment affected by the potentially chargeable event (see section 809VG(6)),
(b) “the fixed amount” is the amount of that kind of income or gain that the holding is treated as containing by virtue of subsection (3) or (4B) (as the case may be), and
(c) section 809Q does not apply in determining the affected income or gains.
(8A) For the purposes of subsection (8)(a)—
(a) the “relevant affected income or gains” means—
(i) in a case where section 809VG(6A) applies to treat some of the affected income or gains as being comprised of TRF capital, so much of the affected income or gains as is not treated as being comprised of TRF capital, or
(ii) otherwise, all of the affected income or gains, and
(b) the “relevant proportion” of the portion of the investment means—
(i) in a case where section 809VG(6A) applies to treat some of the affected income or gains as being comprised of TRF capital, the proportion of the portion of the investment that is equal to the proportion of the affected income or gains as is not treated as being comprised of TRF capital, or
(ii) otherwise, the whole of the portion of the investment.
(9) Section 809R(2) and (3) and section 809S apply for the purposes of this section.
(1) This section applies to income or chargeable gains if—
(a) the income or gains would (but for subsection (2)) be regarded as remitted to the United Kingdom because conditions A and B in section 809L are met,
(b) condition A in section 809L is met because a service is provided in the United Kingdom (“the relevant UK service”), and
(c) condition B in section 809L is met because section 809L(3)(a) or (b) applies to the consideration for the relevant UK service (“the relevant consideration”).
(2) The income or chargeable gains are to be treated as not remitted to the United Kingdom if the following conditions are met; but this is subject to subsection (5).
(3) Condition A is that the relevant UK service relates wholly or mainly to property situated outside the United Kingdom.
(4) Condition B is that the whole of the relevant consideration is given by way of one or more payments to one or more bank accounts held outside the United Kingdom by or on behalf of the person who provides the relevant UK service.
(5) Subsection (2) does not apply if the relevant UK service relates (to any extent) to the provision in the United Kingdom of—
(a) a benefit that is treated as deriving from the income by virtue of section 735, or
(b) a relevant benefit within the meaning of section 87B of TCGA 1992 that is treated as deriving from the chargeable gains by virtue of that section.
(6) Sections 275 to 275C of TCGA 1992 (location of assets) apply for the purposes of subsection (3) as they apply for the purposes of TCGA 1992.
(1) Exempt property which is brought to, or received or used in, the United Kingdom in circumstances in which section 809L(2)(a) 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 (see section 809Z).
(4) Clothing, footwear, jewellery and watches ... are exempt property if they meet the personal use rule (see section 809Z2).
(5) Property ... is exempt property if—
(a) the property meets the repair rule (see section 809Z3),
(b) the property meets the temporary importation rule (see section 809Z4), or
(c) the notional remitted amount (see section 809Z5) is less than £1,000.
809Y Property that ceases to be exempt property treated as remitted
(1) Property that ceases to be exempt property is to be treated as having been remitted to the United Kingdom at the time it ceases to be exempt property.
(2) Property ceases to be exempt property in any of the following cases.
(3) The first case is where the whole or part of the exempt property is sold, or otherwise converted into money, whilst it is in the 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 United Kingdom, and
(c) does not meet any other relevant rule.
(4A) Where exempt property has been lost, stolen or destroyed, the first and second cases do not apply in relation to the property during any period—
(a) beginning with the time at which it was lost, stolen or destroyed, and
(b) (if lost or stolen) ending with the time at which it is recovered.
(4B) The third case is where a compensation payment is released in respect of exempt property that has been lost, stolen or destroyed.
(5) In this section—
“money” includes—
a traveller's cheque,
a promissory note,
a bill of exchange, and
any other—
instrument that is evidence of a debt, or
voucher, stamp or similar token or document which is capable of being exchanged for money, goods or services, and
“relevant rule” means—
the public access rule,
the personal use rule,
the repair rule, and
the temporary importation rule.
(6) Subsection (1) does not apply to property that ceases to be exempt property by virtue of the first or second case if—
(a) the property, or anything into which it is converted, is used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which it ceased to be exempt property, and
(b) the remittance basis user makes a claim for relief under this subsection on or before the first anniversary of the 31 January following the tax year in which the property ceases to be exempt property.
(7) The reference in subsection (6)(a) to anything into which property is converted is—
(a) if the property is disposed of, the disposal proceeds, and
(b) if the property is converted into money in some other way, the money into which it is converted,
(including where the disposal or conversion occurs after the property ceases to be exempt property).
(8) If subsection (1) does not apply by virtue of subsection (6)—
(a) the property (or thing into which it was converted) used to make the investment is to be treated as containing or deriving from an amount of each kind of income and gain mentioned in section 809Q(4)(a) to (h) equal to the fixed amount,
(b) the income or gains treated under section 809X as not remitted to the United Kingdom continue to be treated as not remitted to the United Kingdom even though the property has ceased to be exempt property, and
(c) the business investment provisions apply to the income and gains as they apply to income or gains treated under section 809VA(2) as not remitted to the United Kingdom.
(9) “The fixed amount” is the amount of that kind of income or gain contained in the property when it was brought to, or received or used in, the United Kingdom (as mentioned in section 809X).
(10) If the investment is made using more than just the property (or thing into which it was converted), treat only the part made using the property (or thing into which it was converted) as “the investment” for the purposes of the business investment provisions.
809YA Exception to section 809Y: proceeds taken offshore or invested
(1) Section 809Y(1) does not apply to property if—
(a) it ceases to be exempt property because the whole of it is sold whilst it is in the United Kingdom, and
(b) conditions A to F are met.
(2) Condition A is that the sale is to a person other than a relevant person.
(3) Condition B is that the sale is by way of a bargain made at arm's length.
(4) Condition C is that, once the sale is completed, no relevant person—
(a) has any interest in the property,
(b) is able or entitled to benefit from the property by virtue of any interest, right or arrangement, or
(c) has any right (whether conditional or unconditional) to acquire any interest mentioned in paragraph (a) or ability or entitlement mentioned in paragraph (b).
(5) Condition D is that the whole of the disposal proceeds are released (whether in one go or in instalments) on or before the final deadline.
(6) “The final deadline” is the first anniversary of the 5 January following the tax year in which the property ceases to be exempt property (within the meaning of section 809Y).
(7) Condition E is that—
(a) the whole of the disposal proceeds are taken offshore or used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which the proceeds are released, or
(b) if the disposal proceeds are paid in instalments, each instalment is taken offshore or used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which the instalment is released.
(8) But if any of the disposal proceeds are released in the period of 45 days ending with the final deadline, Condition E is satisfied, as respects those proceeds, only if they are taken offshore or used by a relevant person to make a qualifying investment on or before the final deadline.
(9) Condition F is that, if Condition E is satisfied wholly or in part by using disposal proceeds to make a qualifying investment, the remittance basis user makes a claim for relief under section 809YC(2) on or before the first anniversary of the 31 January following the tax year in which the property is sold.
(10) For the purposes of this section, proceeds or instalments are “released” on the day on which they first become available for use by or for the benefit of any relevant person.
(11) This section does not apply if the sale is made as part of or as a result of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(1) An officer of Revenue and Customs may agree in a particular case to extend any period within which disposal proceeds (or instalments) must be taken offshore or used by a relevant person to make a qualifying investment in order to satisfy Condition E.
(2) The power to agree to an extension is exercisable only in exceptional circumstances and only if the remittance basis user requests such an extension.
(1) This section has effect if section 809Y(1) does not apply to property by virtue of section 809YA.
(2) The income and gains treated under section 809X as not remitted to the United Kingdom continue to be treated after the sale as not remitted to the United Kingdom even though the property has ceased to be exempt property.
(3) But nothing in subsection (2) prevents anything done in relation to any part of the disposal proceeds after that part is taken offshore (or used to make a qualifying investment) from counting as a remittance of the underlying income or gains to the United Kingdom at the time when the thing is done.
(4) Treat the disposal proceeds as containing or deriving from an amount of each kind of income and gain mentioned in section 809Q(4)(a) to (h) equal to the amount of that kind of income or gain contained in the exempt property when it was brought to, or received or used in, the United Kingdom (as mentioned in section 809X).
(5) Where Condition E was met by using the disposal proceeds to make a qualifying investment—
(a) the business investment provisions apply to the income and gains that continue, by virtue of subsection (2), to be treated as not remitted as they apply to income or gains that are treated under section 809VA(2) as not remitted, and
(b) if the investment was made using more than just the disposal proceeds, treat only the part of the investment made using the disposal proceeds as “the investment” for the purposes of those provisions.