Section 408A | Temporary non-residents

(1)This section applies if an individual is temporarily non-resident.

(2)Dividends within subsection (3) are to be treated for the purposes of this Chapter as if they were received by the individual, or as if the individual became entitled to them, in the period of return.

(3)A dividend is within this subsection if—

(a)the individual receives or becomes entitled to it in the temporary period of non-residence,

(b)it is a dividend of a company that would be a close company if the company were UK resident,

(c)the individual receives or becomes entitled to it by virtue of being at a relevant time—

(i)a material participator in the company, or

(ii)an associate of a material participator in the company, and

(d)ignoring this section, the individual—

(i)is not liable for tax under this Chapter in respect of the dividend, but

(ii)would have been so liable if the individual had received the dividend, or become entitled to it, in the period of return.

(4)For the purposes of subsection (3)—

(a)Repealed

(b)Repealed

(c)Repealed

(d)paragraph (d)(i) includes a case where the individual could be relieved of liability on the making of a claim under section 6 of TIOPA 2010 (double taxation relief), even if no claim is in fact made.

(4A)Where—

(a)a company (“company A”) makes a payment (including by way of a loan) to the individual in the temporary period of non-residence,

(b)the individual is, at a relevant time, a material participator in, or an associate of a material participator in, another company (“company B”) that would be a close company if it were UK resident,

(c)at the time the payment was made, company B controls (within the meaning of sections 450 and 451 of CTA 2010) company A, and

(d)it is reasonable to suppose that the making of that payment is intended to avoid—

(i)an amount being received by the individual by way of dividend that falls within subsection (3)(c), or

(ii)the individual becoming entitled to such a dividend,

the individual is to be treated as having received, at that time, a dividend in that amount that falls within subsection (3)(b) and (c).

(4B)Where—

(a)a company makes a payment (including by way of a loan) to any person other than the individual in the temporary period of non-residence,

(b)if the company had made a dividend to the individual at that time, it would have been a dividend within subsection (3), and

(c)the individual receives an amount or a benefit (“the relevant receipt”) as a result of arrangements that it is reasonable to suppose are intended to secure that—

(i)the individual receives the benefit of the payment or any part of it, but

(ii)without the individual receiving, or becoming entitled to, a dividend that falls within subsection (3)(c),

the individual is to be treated as having received, in that period, a dividend in the amount of the value of the relevant receipt, that falls within subsection (3)(b) and (c).

(4C)For the purposes of subsection (4B)(c) “arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

(4D)Where tax of a similar character to income tax is payable by the individual under the law of a territory outside the United Kingdom on a dividend within subsection (3)—

(a)credit for any such tax paid by the individual is to be allowed against income tax chargeable in respect of the dividend, and

(b)the credit is to be given effect by treating the amount of the dividend as reduced to such amount as would secure that so much of the credit is given as does not exceed the income tax chargeable in respect of the dividend.

(5)Repealed

(6)Repealed

(7)Repealed

(8)Repealed

(9)If section 406 or 407 applies, references in this section to a dividend being received by the individual are to a cash dividend being paid over to the individual or (as the case may be) a dividend being treated as paid to the individual.

(10)In this section—

(a)“associate” and “participator” have the same meanings as in Part 10 of CTA 2010 (see sections 448 and 454),

(b)a “material participator” is a participator who has a material interest in the company, as defined in section 457 of that Act,

(c)“relevant time” means—

(i)any time in the year of departure or, if the year of departure is a split year as respects the individual, the UK part of that year, or

(ii)any time in one or more of the 3 tax years preceding that year.