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HMRC internal manual

General Insurance Manual

Double taxation relief: foreign tax on investment income: accounting periods beginning on or after 1 April 2000 section 804C ICTA 1988: limitation of relevant income


The general approach of ICTA88/S804C is to pro-rate expenses and reliefs in a similar way to the approach set out in LAM 14A.52. The operative rule is in section 804C(2). It provides that the amount of credit to be allowed is limited by reducing the whole or part of any amount of income as is referable to the category concerned (called the relevant income), applying two separate limitations. This rule is very similar to that applying to banks receiving interest from which foreign tax has been deducted (ICTA88/S798 and BAM33000 onwards). Section 804C(5) provides that no other rule of law is to operate to require any deduction - this means the approach in LAM14A.52 onwards no longer applies -but this approach was not in any event followed for general insurance business.

Section 804E then sets out for general insurance business the meaning of two important terms used in section 804C - total income and total relevant expenses and shows the places where the relevant figures are to be found.