Commentary on Sections Overview Overview Section 817: The independent broker conditions
2402.This section sets out the independent broker conditions to be met in relation to a transaction carried out on behalf of a non-UK resident by a broker in the United Kingdom for the purposes of sections 813 and 816. It is based on the provisions of sections 127(1) and (2) and 128(3) of FA 1995 and section 151(2) of and paragraph 2(1) and (2) of Schedule 26 to FA 2003.
2403.Three of the conditions, in section 127(2)(a) to (c) of FA 1995 and paragraph 2(2)(a) to (c) of Schedule 26 to FA 2003, are substantively the same. Accordingly, there is a set of common conditions, A to C, in subsections (2) to (4), which apply to all non‑UK residents, including non‑UK resident companies.
2404.The final condition in section 127(2)(d) of FA 1995 is not substantively the same as the final condition in paragraph 2(2)(d) of Schedule 26 to FA 2003. These conditions are, therefore, set out separately.
2405.Condition D in subsection (5), based on the condition in section 127(2)(d) of FA 1995, applies for the purposes of section 813.
2406.Condition E in subsection (6), based on the condition in paragraph 2(2)(d) of Schedule 26 to FA 2003, applies for the purposes of section 816.
2407.In subsection (5), the words “amounts which are chargeable to capital gains tax” reflect the words “other amounts” in section 127(2)(d) of FA 1995. Those other amounts are the “amounts which, by reference to that branch or agency, are chargeable to capital gains tax under section 10 of the Taxation of Chargeable Gains Act 1992 (non‑residents)” mentioned in section 126(2)(c) of FA 1995.
2408.In subsection (5), a reference to “transaction income” has been substituted for the reference in section 127(2)(d) of FA 1995 to “taxable sums”. The latter expression includes not only income but also chargeable gains arising from transactions in respect of which the independent broker conditions are met. It is not necessary to include specific reference here to such chargeable gains, as, by virtue of the reference to taxable sums in section 127(2)(d) of FA 1995, the non‑UK resident will not, under section 126(2) of that Act, have the broker as the non‑UK resident’s UK representative in relation to such chargeable gains.
2409.In subsection (6), it has been made clear that the other transaction carried out in the same accounting period may be of any kind and is not limited to broking transactions.