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HMRC internal manual

International Manual

UK residents with foreign income or gains: double taxation relief: ‘Root income’ basis - legal position

The authority for the `root income’ basis is found in the credit Article in double taxation agreements which have been negotiated or amended since the decision in Duckering v Gollan referred to in INTM161140 paragraph (b). This says `… tax payable under the laws of … and in accordance with this convention, whether directly or by deduction, on profits income or chargeable gains from sources within … shall be allowed as a credit against any UK tax computed by reference to the same profits income or chargeable gains by reference to which the … tax is computed’. TIOPA10/S9 (1)-(3) is the authority for unilateral relief purposes.

There are still a few agreements in force which have not been revised or amended and which provide for credit relief to be given on the statutory income basis. See, however, INTM161170 for guidance on the practice to be adopted where the statutory income basis is the strict legal basis.