Members resident anywhere outside the UK
Section 794(2)(bb) ICTA 1988 (introduced by Paragraph 4 Schedule 30 Finance Act
extends UK credit relief to all non-residents who are doing business in the UK through a branch or agency. This applies to all accounting periods that end on or after 21 March 2000.
The new legislation therefore applies to all non-UK resident Lloyd’s members world-wide in respect of foreign tax paid on their Lloyd’s income and has effect from 1999-2000 onwards. Members of Lloyd’s resident in all other countries will be able to claim credit relief for non-UK tax paid on their Lloyd’s income. This is, however, subject to the restriction on “own country tax” described in section 4 below.
Members resident in EEA countries: claims for past years
Also on 21 March 2000, the Inland Revenue announced that residents of other European Union and European Economic Area states would be entitled to claim credit relief for past years in respect of the profits of their UK branches.
This affects Lloyd’s members who are resident, or were resident for the relevant year of assessment in any of the following territories:
Belgium, Denmark, Germany, Greece, Spain, France, Iceland, Ireland, Italy, Lichtenstein, Luxembourg, Netherlands, Norway, Austria, Portugal, Finland and Sweden.
The Inland Revenue’s statement followed the judgement of the European Court of Justice of 21 September 1999 in the case of Compagnie de Saint-Gobain v Finanzamt Aachen-Innenstad (Case C-307/97). In that case the Court decided that that Germany could not deny a French resident company with a German branch double taxation relief in respect of the income of the branch if relief would be allowed to a German resident.
Although credit relief is not, strictly speaking, available in respect of “own country tax”, see section 4 below for details of how the Inland Revenue will deal with claims for years up to and including 1998-99 in practice.
EEA resident individuals need not rely on the commencement date for section 794(2)(bb) ICTA 1988 to claim credit relief, as they can claim relief for past and current years by virtue of the European Court of Justice decision.
Any claims to credit relief for past years, to replace deduction relief, should be sent to the member’s usual tax office. Claims are subject to the normal time limits, which means that members will generally be able to go back and revise the position for 1994-95 and following years if they wish to do so.