IFM37410 - Prevention of double taxation: Introduction

Prevention of double taxation

Introduction

TCGA92/S103KE
TMA70/S42 - S43

Where an individual is liable to capital gains tax (CGT) on a carried interest gain under TCGA92/Part 3/Ch 5, and another UK tax has been paid by that individual or another person (for an example see IFM37450 ) in relation to that carried interest, that individual can make a claim for adjustments to avoid double taxation.

Under this provision, there will be no relief available against CGT where tax has been paid on amounts which are then treated as permitted deductions (IFM37236) in computing the chargeable gain.

No relief is available under this provision for non-UK tax charges. See INTM160000 for details of when double taxation relief may be available and the how to access it.

Making a claim

A claim may be made in a return, amendment of a return or in writing to HMRC. Under TMA70/S43 a claim must be made within four years from the end of the year of assessment to which it relates. TCGA92/S103KE(7) however provides that the normal time limits of making a claim do not apply and a claim can be made in respect of any period.

HMRC may seek to test the validity of any claim and so evidence should be retained by the individual to support their claim.

Where a return can be amended under normal time limits, the most practical solution is to amend the return. Any claim that falls after this window should be made in writing to an officer of HMRC.

Whichever method is used to make a claim, claimants should provide the following:

  • An explanation of the circumstance giving rise to the claim,
  • Details of the tax paid by the claimant or another person or company (where relevant). This should include the amount, the other person’s Unique Tax Reference (UTR) and the tax year the payment relates to.

Whilst not required under TCGA92/S103KE, this information will assist HMRC Officers in more readily determining the extent to which the consequential adjustments claimed are just and reasonable.

SACM3015 [https://www.gov.uk/hmrc-internal-manuals/self-assessment-claims-manual/sacm3015 (link is external)] provides full details of how to make a claim.