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HMRC internal manual

International Manual

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HM Revenue & Customs
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Non-residents trading in the UK: through UK investment managers, brokers or Lloyd’s agents - investment manager exemption interaction with double taxation treaties and other domestic legislation

Other relief may be available

The investment manager exemption provisions supplement but do not replace any provision for relief from UK taxation under the terms of a double taxation treaty. This means that where the investment manager exemption is not available, relief may still be available under the terms of a treaty where a UK agent is an agent of independent status acting in the ordinary course of his business. Where there is no treaty, the position differs between corporation tax and income tax.

Corporation tax

CTA09/S5 makes the charge to corporation tax contingent upon the non-resident company carrying on a trade in the UK through a permanent establishment. CTA10/S1142(1) provides that an agent of independent status acting in the ordinary course of his business is not regarded as such a permanent establishment. Domestic legislation thereby affords the equivalent of treaty protection.

CTA10/S1146 supplements these provisions by providing that, in relation to ‘investment transactions’, where the conditions at INTM269060 are met, an investment manager is regarded as an agent of independent status acting in the ordinary course of his business.

Income tax

The charge to income tax is not contingent upon the existence of a permanent establishment (see ITTOIA05/S6). Unless there is a double taxation treaty with a permanent establishment article which gives relief in respect of agents of independent status acting in the ordinary course of their business, a non-resident trading in the UK through an agent will be within the charge to income tax. However, the investment manager exemption provides relief in relation to ‘investment transactions’ carried out through an investment manager in these circumstances, where the conditions at INTM269060 are met.