Section 1025A | Application of Chapter: employees of overseas companies who take up employment with, or work for, a UK company

(1)This section applies if—

(a)a person (“E”) has, or had, an employment (“the overseas employment”) with a non-UK resident company not within the charge to corporation tax (“the overseas company”),

(b)E or another person acquired restricted shares because of the overseas employment (whether or not pursuant to an option),

(c)the case is not within section 1025(1)(a),

(d)relief under Chapter 2 or 3 would have been available to the overseas company in relation to the acquisition if, at all material times—

(i)the overseas company had carried on a business within subsection (2) (“a qualifying business”), and

(ii)the overseas employment had related to that business,

(e)E has a UK employment with a UK company (see subsections (3) and (4)),

(f)the UK employment is in relation to a qualifying business carried on by the UK company,

(g)an event occurs that is a chargeable event in relation to the restricted shares for the purposes of section 426 of ITEPA 2003, and

(h)because of the UK employment, an amount of employment income of E is charged to tax under ITEPA 2003 in relation to the chargeable event.

For the purposes of paragraph (d) it does not matter if the amount of the relief would have been calculated as nil.

(2)A business is within this subsection so far as—

(a)it is carried on by a company, and

(b)the company is within the charge to corporation tax in relation to the profits of the business or would be but for section 18A.

(3)A company is a “UK company” if it is a UK resident company or a non-UK resident company within the charge to corporation tax.

(4)E has a “UK employment” with a UK company if—

(a)E is employed by the UK company, or

(b)E is not employed by the UK company but provides, and is obliged to provide, personal service to the UK company, in the course of performing the duties of the overseas employment (in which case, references to the UK employment are to the personal service E provides).

(5)Relief under this Chapter is available to the UK company as a result of the chargeable event.

(6)References in this Chapter to the original relief (other than in section 1025B) are to be treated as references to the relief that would have been available as mentioned in subsection (1)(d).

(7)In section 1026(3) (amount of relief on occurrence of chargeable event), the reference to the employee is to be read as a reference to E.

(8)For the purposes of section 1028(2) (giving relief), as that provision has effect by virtue of subsection (6), in section 1013(2) to (5) or (as the case may be) 1021(2) to (5)—

(a)references to the employing company are to be treated as references to the UK company,

(b)the reference to the relevant employment is to be treated as a reference to the UK employment, and

(c)references to a business within section 1007(2) or (as the case may be) 1015(2) are to be treated as references to a business within subsection (2).

(9)If, in relation to the chargeable event, the amount of relief available would otherwise be more than the total amount of employment income of E charged to tax under ITEPA 2003, the amount of relief is (notwithstanding any other provision of this Chapter) limited to the total amount of that income so charged.

(10)If relief is available to more than one company as a result of the same chargeable event, relief may only be given to one of them in respect of that event.