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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

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Remittance Basis: Identifying Remittances: Conditions A and B: Condition A - provision of a service

Condition A must be taken together with Condition B RDRM33110 in determining whether a taxable remittance has occurred.

The second part of Condition A (ITA07/s809L(2)(b)) looks at occasions when a service is provided in the UK by or for the benefit of a relevant person RDRM33030.

A service provided in the UK could be anything from child-minding or house-cleaning, accountancy or legal advisory services, private school tuition, travel services to, from and within the UK and so on.

The provision applies to all relevant persons. This means that the person to whom the service is provided in the UK might not be the individual taxpayer him or herself, but another relevant person.

Example 1

Johanna, who lives in Manchester, is a remittance basis user. Her 15 year old son Joshua is given guitar lessons by a local master guitarist. Condition A is met; in order to determine whether there has been a taxable remittance we must now consider Condition B.

Also refer to the later examples under Condition B RDRM33140 - direct remittance of income or gains and Condition B - indirect remittance of income or gains and RDRM35030 Conditions A and B - remittances derived from foreign income and gains.

Example 2

Lara has some shares and bonds in Paraguay, which she manages herself. However she uses a UK legal firm to provide advice on the legal aspects of Paraguayan contract law. A service is provided in the UK to a relevant person. Condition A is met; in order to determine whether there has been a taxable remittance we must now consider Condition B.

Note - although there may be a remittance the exemption provided for at ITA2007/S809W may also be due as the service relates to property.

Example 3

Charlotte, a remittance basis user, purchases an air ticket using her foreign income. The ticket is to travel from the UK to Belgium. The ticket was purchased from an overseas company and payment made into the company’s offshore bank account.

Because part of the travel service was provided in the UK (the journey begins and ends in the UK) there is a remittance to the UK. The exemption provided for at ITA2007/S809W is not due as the service does not relate to property.

Note: Refer to RDRM34040 Relevant services provided in the UK for further information about the exemption at ITA2007/S809W for remittances in relation to payments made offshore that are made for services that relate wholly or mainly to property situated outside of the UK.