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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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HM Revenue & Customs
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Remittance Basis: Identifying Remittances: Overview of identifying a remittance: Relevant person - definition

If the legislation was only to look at property brought to, or received or used in the UK directly by the remittance basis user him or her self they could ‘give away’ or otherwise ‘alienate’ their foreign income or gains offshore to persons whom they may be able to control or persons whom they trust to act on their behalf. The individual could then use that other person to then bring untaxed foreign income or gains into the UK for use by or for the individual him or her self.

The concept of ‘relevant person’ was introduced in Finance Act 2008 to ensure that any foreign income or gains of an individual that are brought to the UK (or used outside the UK but still regarded as ‘remitted’ to the UK under the rules at ITA07/s809L) by way of any relevant person, or for the benefit or enjoyment of any relevant person is taxed on the individual.

This is subject to any exemption that may apply (refer to RDRM34000).

For this reason the new rules at ITA07/s809L and the following sections on the meaning of income and gains ‘remitted to the UK’ do not often refer to the ’individual’ taxpayer.

Instead, the rules refer to remittances of an individual’s foreign income or gains being made by or for the benefit or enjoyment of a ’relevant person’. This broader definition aims to prevent individuals using family members, or other close associates or entities, to make or receive remittances (as defined at Conditions A to D) RDRM33020 of their foreign income or gains and then avoiding UK tax by claiming it is no longer ‘their’ income or gains that has been remitted, or that it is not them who have made or benefited from the remittance.

Relevant persons are defined at ITA07/s809M as:

  1. the individual
  2. the individual’s husband, wife or civil partner
  3. a child or grandchild of the individual or the individual’s husband, wife or civil partner, (where the child or grandchild is under 18 years old)
  4. a close company in which any other category of relevant person is a participator (refer to the Company Taxation Manual 60060 onwards), or from 22 April 2009 a company which is a 51% subsidiary of such a close company
  5. a company in which any other category of relevant person is a participator, and which would be a close company if it were resident in the UK, or from 6 April 2010 a company which is a 51% subsidiary of such a company
  6. the trustees of a settlement of which any other category of relevant person is a beneficiary, or
  7. a body connected with such a settlement.

For the purpose of ‘2’ above a man and woman living together as husband and wife and two people of the same sex living together as if they were civil partners of each other are treated as if they were husband and wife or as if they were civil partners of each other.

There is a no minimum period for cohabitation; it is a question of fact as to whether two individuals are living together as spouses or civil partners. Some guidance concerning what principles you might look at to establish whether partners are living together as husband or wife or as civil partners can be found at IN605+.

For the purpose of ‘4’ above:

  • “close company” has the same meaning as in the Corporation Tax Acts (refer to ICTA88/s414 and ICTA 1988/s415)
  • “participator” in relation to a close company, means a person who is a participator for the purposes of ICTA88/s419 (refer to ICTA88/s417(1) and ICTA88/s419(7
  • “51%subsidiary” has the same meaning as in the Corporation Tax Acts (refer to section ICTA88/s838.

For the purpose of ‘6’ above, a beneficiary of a settlement means any person who receives, or may receive any benefit under or by virtue of the settlement.