Section 812A — Income Tax Act 2007: Temporary non-residents

Temporary non-residents 812A 1 This section applies if—

a an individual is temporarily non-resident, b the individual's liability to income tax for a tax year is limited under section 811, c that tax year (“the non-resident year”) falls within the temporary period of non-residence, and d the individual's income for that tax year includes relevant investment income.

2 The total income (see Step 1 of the calculation in section 23) on which the individual is charged to income tax for the year of return is to be increased by an amount equal to the amount of that relevant investment income.

3 But the notional UK tax on that relevant investment income is to be allowed as a credit against the individual's liability to income tax for the year of return under Step 6 of the calculation in section 23.

4 Income is “relevant investment income” if—

a it is chargeable under Chapter 3 or 5 of Part 4 of ITTOIA 2005 (dividends etc from UK resident companies and stock dividends from UK resident companies),

b the distributing company is a close company, and c the income arises or is treated as arising to the individual because the individual was at a relevant time—

i a material participator in that company, or ii an associate of a material participator in the company. 4A Where—

a a company (“ company A ”) makes a payment (including by way of a loan) to the individual in the non-resident year, b the individual is, at a relevant time, a material participator in, or is an associate of a material participator in, another company that is a close company (“ company B ”),

c at the time the payment was made, company B controls (within the meaning of sections 450 and 451 of CTA 2010) company A, and d it is reasonable to suppose that the making of that payment is intended to avoid the amount of the payment being included in the individual’s income for the non-resident year as relevant investment income, the amount of the payment is to be treated as relevant investment income of the individual for the non-resident year. 4B Where—

a a company makes a payment (including by way of a loan) to any person other than the individual at any time in the non-resident year, b if the company had made a dividend to the individual at that time, it would be relevant investment income of the individual, and c the individual receives an amount or a benefit (“the relevant receipt”) as a result of arrangements that it is reasonable to suppose are intended to secure that—

i the individual receives the benefit of the payment or any part of it, but ii without the amount being included in the individual’s income for the non-resident year as relevant investment income, the amount of the value of the relevant receipt is to be treated as relevant investment income of the individual for the non-resident year. 4C For the purposes of subsection (4B)(c) “arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable). 4D Where tax of a similar character to income tax is payable by the individual under the law of a territory outside the United Kingdom on relevant investment income—

a credit for any such tax paid by the individual is to be allowed against income tax chargeable in respect of the relevant investment income, and b the credit is to be given effect by treating the amount of the relevant investment income as reduced to such amount as would secure that so much of the credit is given as does not exceed the income tax chargeable in respect of the relevant investment income. 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 The “notional UK tax” on relevant investment income is—

a the total of any sums in respect of that income that were included within amount A in determining the limit under section 811, less b any credit for foreign tax paid in respect of that income that was allowed under Chapter 2 of Part 2 of TIOPA 2010 against the individual's liability to income tax for the non-resident year.

8 The following matters are to be determined on a just and reasonable basis—

a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b the extent to which a sum included within amount A is a sum in respect of relevant investment income.

9 Nothing in any double taxation arrangements is to be read as preventing the individual from being chargeable to income tax by virtue of this section (or as preventing a charge to that tax from arising as a result).

10 Part 4 of Schedule 45 to FA 2013 (statutory residence test: anti-avoidance) explains—

a when an individual is to be regarded as “temporarily non-resident”, and b what “the temporary period of non-residence”, “the year of departure” and “the period of return” mean.

11 In this section— “ associate ” and “ participator ” have the same meanings as in Part 10 of CTA 2010 (see sections 448 and 454); “ the distributing company ” means the UK resident company mentioned in section 383(1) or, as the case may be, 410(1) of ITTOIA 2005; “ material participator ” means a participator who has a material interest in the company, as defined in section 457 of CTA 2010; “ relevant time ” means— any time in the year of departure or, if the year of departure is a split year as respects the individual, the UK part of that year, or any time in one or more of the 3 tax years preceding that year; ... “ year of return ” means the tax year consisting of or including the period of return.