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HMRC internal manual

International Manual

Non-residents trading in the UK: through UK investment managers, brokers or Lloyd’s agents: Brokers

Conditions to be met

The term ‘broker’ applies to those agents who, by the custom of certain markets are entitled, and recognised as being entitled, to act for both purchaser and seller in that market (Bankes, LJ in Wilcox v Pinto 9TC129).

There are four conditions that must all be met before the specific exemption for brokers can apply (ITA07/S835L and CTA10/S1145). These are as follows:

  • The broker must be carrying on the normal business of a broker
  • The transaction must be carried out by the broker in the ordinary course of the broker’s business.
  • The broker’s fee must not be less than customary for that class of business.
  • The non-resident must not, during the same chargeable period, carry out any trading transactions through the broker other than those that are excluded by this rule.

The effect of these conditions is to exempt only those brokers who are acting in the ordinary course of their business on arm’s length terms.