ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change is in taxpayers’ favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small. Change 105: Accrued income profits: relief for unremittable transfer proceeds: time limits: sections 668 and 669
This change alters the time limit for claiming relief from tax on accrued income scheme profits if the proceeds of the transfer of foreign securities are unremittable.
Section 723 of ICTA provides a relief if a person is treated under section 713(2)(a) of ICTA as entitled to a sum or sums in respect of a transfer or transfers of securities of a particular kind which are situated outside the United Kingdom and the proceeds are unremittable. Under section 723(3) of ICTA the relief may only be given if a claim is made and section 723(6) of ICTA provides:
“No claim under this section shall be made in respect of a transfer more than six years after the end of the interest period in which the transfer occurred.”
The usual time limit for making claims is set out in section 43 of TMA, which provides:
“Subject to any provision of the Taxes Acts prescribing a longer or shorter period, no claim for relief in respect of income tax or capital gains tax may be made more than five years after the 31st January next following the year of assessment to which it relates.”
Moreover, the time limit under section 279 of TCGA (which provides similar relief from capital gains tax where capital gains from the disposal of assets situated outside the United Kingdom cannot be remitted to the United Kingdom) is also five years from 31 January next following the tax year in which the gains accrue. (See section 279(5)(a) of TCGA.)
There does not appear to be any justification for a different time limit applying for claims under section 723 of ICTA. So, in rewriting that section in sections 668 and 669, the time limit for making the claim for relief has been changed to bring it into line with the period that applies under section 43 of TMA. And sections 668(7) and 669(4) provide that the claim must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year in which the profits would be chargeable were it not for the relief (that is, 31 January in the following tax year).
The new time limit may be longer or shorter than the time limit in section 723(6) of ICTA, depending on when in the tax year the interest period of the securities in which the transfer or transfers were made ends. If the interest period ends before 31 January in a tax year, the change will be beneficial. If it ends later the change will be adverse, but those adversely affected may make an election under Part 2 of Schedule 2 to this Act to disapply the change for the tax year to which the election applies.