INTM600990 | Transfer of assets abroad: The income charge: Power to enjoy - right to recovery of tax paid

Finance Act 2025 introduced a general right to recovery for individuals who are liable to a charge to tax under ITA07/721. The right to recovery legislation can be found at ITA07/S725A.

The right to recovery came into effect from 6 April 2025 and gives an individual who is assessable on the income of a person abroad as a result of ITA07/S720 the right to recover the tax paid from the person abroad.

For the purposes of recovering the tax the individual can request a certificate from an officer of HMRC specifying the amount of income tax paid. Any tax recovered from the person abroad will not be treated as a benefit for the purpose of the benefits charge under ITA07/S731 or ITTOIA05/S643A should either be in point. Likewise, any tax recovered will not be treated as a capital payment for the purpose of TCGA92/S87.

As a result of the right to recover the settlor will not be treated as having an interest in a settlement or reserving a benefit where this would otherwise not have been the case.

Example

Mr A is the settlor of a Jersey Trust which holds shares in a British Virgin Islands company, A Ltd. In 2025-2026 A Ltd receives income of £500,000 and Mr A is charged to income tax on this income under ITA07/S720. Mr A pays tax on this income of £225,000. Mr A can ask A Ltd to re-imburse him for the tax paid of £225,000. In support of his claim for reimbursement Mr A can ask HMRC to provide him with a certificate that specifies how much tax Mr A has paid in respect of the income of the person abroad that is treated as his.

If a customer is dealt with by WMBC Wealthy and has a Customer Compliance Manager (CCM) they should approach their CCM for a certificate. All other customers should contact HMRC using the details at https://www.gov.uk/contact-hmrc or in writing at:

Self Assessment

HM Revenue and Customs

BX9 1AS

United Kingdom

To assist the HMRC Officer in completing the certificate it is asked that when making a request for a certificate that the individual identifies the year for which the certificate is requested and whether the request includes income contained in boxes 10 and/or 12 of the foreign pages of their return.

The certificate should be as follows:

Certificate of income tax paid under Section 720 or Section 727 Income Tax Act 2007

HMRC reference number: [UTR]

I certify that, for the year ended 5 April [year], £[amount of income] was treated as the income of [customer’s name and address].

They were charged £[amount of tax] income tax in respect of this income by virtue of either Section 720 or Section 727 ITA 2007 and for the purposes of recovering the income tax paid under either Section 725A or Section 729B ITA 2007 I confirm that this tax has been paid.

HM Inspector of Taxes or Officer of Revenue and Customs