UK: Tax Update: 21 May 2007

Last Updated: 22 May 2007
1. Section 831 ITTOIA 2005

For tax years from 2005/06 onwards individuals who are not domiciled in the UK (or are not ordinarily UK resident) can choose on a year by year basis whether they wish to be assessed on their relevant foreign income ("RFI") on the arising basis or the remittance basis. A specific claim must be made if the taxpayer wishes to choose the remittance basis, but HMRC have confirmed that the claim will be treated as made if the Non Residence pages and page F2 of the Foreign Pages have been completed. Where no remittances have been made in the year in question, the claim can be indicated by an entry in the Additional Information box.

That leads onto the question of what action should be taken where a non-domiciled individual has income arising outside of the UK, but has no income arising within the UK and consequently has not received a self assessment return. If they do not file a specific claim under Section 831 ITTOIA 2005 will they be regarded as assessable on the whole of the income arising?

HMRC has confirmed that in these circumstances, the individual will need to consider notifying chargeability under Section 7 TMA 1970. However, if the individual is able to make a claim under Section 831 and there have been no remittances of RFI then there will be no need to notify. If HMRC subsequently enquire into the individual’s affairs, there will only be an issue if the individual’s personal circumstances do not entitle them to claim the remittance basis or it transpires that there were remittances of RFI that had not been notified.

Section 831(1) says "A person may make a claim for a tax year for the person’s relevant foreign income to be charged for that year in accordance with Section 832". No deadline is stated for submitting a claim and consequently it appears that the claim can be made at any time up to the fi fth anniversary of 31 January following the tax year to which it relates (Section 43(1) TMA 1970).

2. Retrospective Liability for PAYE and NICs

Guidance for Employers where a retrospective liability to Income Tax (PAYE) and Class1 National Insurance Contributions (NICs) occurs has been published on HMRC’s website at

3. Taxation in Europe: the European Commission launches a new online information tool on the taxes in the Member States

The European Commission launches a new information tool for citizens and business "Taxes in Europe": the on-line database which provides information on the main taxes in force in the Member States. In a user-friendly interface, it offers information on around 500 taxes, such as tax base, main exemptions, rate applicable, as are provided to the European Commission by the national authorities. In addition, it gives information on the revenue generated by each tax. Access is free for all users.

Customs duties and tariff are not described in the new database, instead are provided by the Commission via the TARIC database (see en/tarhome.htm.)

The database will be updated every year. Coverage will be extended in the near future to the four Member States (Cyprus, Ireland, Malta and Portugal) currently not represented.

Go to search engine: taxation_customs/taxation/gen_info/info_docs/ tax_inventory/index_en.htm

European Commission

4. Further Discussions on Approved Mileage Allowance Payments

HM Revenue & Customs (HMRC) review of Employee Car Ownership schemes (ECOS) and the interaction with company car tax and mileage payments is still ongoing. HMRC has published an open letter, containing proposals for changes to the current structure of Approved Mileage Allowance Payments. Comments are invited by 31 July 2007. For full details see

5. (HMRC) Further consultations on HMRC powers

HM Revenue & Customs (HMRC) has published two more consultation papers, as part of its work to modernise its powers, deterrents and the accompanying safeguards.

The first paper considers options for a new approach to compliance checks, while the second asks for views on the adequacy and effectiveness of current safeguards for taxpayers.

Currently, HMRC relies on provisions inherited from its predecessor Departments - the Inland Revenue and HM Customs and Excise - which evolved over a considerable period of time, and involve substantial differences between different areas and taxes.

The first consultation paper considers a possible compliance checking framework which would:

  • align rules across income tax, corporation tax, VAT, PAYE and NICs, where doing so would bring more clarity, consistency and efficiency, and reduce costs for both taxpayers and HMRC;
  • set out requirements and safeguards which distinguish between non-business and business taxpayers; and

  • better align the time limits for making tax assessments for different taxes.

The options were discussed with business and representatives of the professions at workshops during the summer and autumn last year, and refl ect responses to previous consultations. channelsPortalWebApp/downloadFile?contentID =HMCE_PROD1_027496

The second paper concentrates on:

  • safeguards within non-tax legislation and non-UK tax legislation which ensure that HMRC itself complies with the legislation, and provides taxpayers with easy access to the underlying safeguards; and
  • safeguards related to the administration of the tax system (e.g. the Civil Service Code, handling of appeals and complaints, guidance and codes of practice).

It will consider whether the safeguards are effective, and whether HMRC is doing enough to make taxpayers aware of the safeguards, and to implement them. channelsPortalWebApp/downloadFile?contentID =HMCE_PROD1_027495

The deadline for submitting comments for both consultations is 10 August 2007.

6. PAYE: 2006-07 PAYE Returns

The deadline for your 2006-07 PAYE Return was 19 May.

HMRC are aware that some agents experienced diffi culty sending their clients’ Returns in early May and are sorry for the inconvenience that caused. They can confi rm that they will not charge a late fi ling penalty if they get a Return by midnight on 28 May. And if you still cannot send your Return by then, they will consider discharging any late fi ling penalty if you can show that you could not send a Return on time for reasons outside of your control.

They will still pay the £150 tax-free payment to employers with fewer than 50 employees as long as their Return is sent online, even if they get it after 28 May.

7. HMRC New tax repayment form (R40) now available

HMRC has redesigned its R40 ‘Tax Repayment Form’ to make it easier for customers to understand and complete.

The new 4-page form has the same look and feel as the Short Self Assessment Tax Return, introduced last year, and follows a successful two-year trial involving around 1,000 people.

Anyone who hasn’t completed a R40 before, and thinks they need to, can request copies of the new form from the HMRC Forms Helpline on 0845 9000 404 or download it from the HMRC website at

8. Deduction For Fees And Subscriptions Paid To Professional Bodies Or Learned Societies: Section 201 ICTA 1988 (Formerly Section 192 ICTA 1970)

List 3, published by HMRC, has been amended to correct a discrepancy between the .html and the .pdf versions.

This list shows

  • Statutory fees or contributions within Section 201 ICTA 1988 (formerly Section 192 ICTA 1970)
  • bodies and learned societies, approved by the Board under section 201. http://www.
9. Definition of offshore fund: BN 29

HMRC has now published guidance on what may constitute an open-ended company in the context of the changes made to the offshore funds regime by clause 56 Finance Bill 2007. channelsPortalWebApp/channelsPortalWebApp. portal?_nfpb=true&_pageLabel=pageVAT_Inf oGuides&propertyType=document&id=HMCE _PROD1_027504

10. HM Revenue & Customs departmental report 2007

The HMRC Departmental Report was laid before Parliament. The report details HMRC’s performance for the year 2006/07, and this is the fi rst time HMRC have combined their Spring Departmental and Annual Reports into one document.

The report details HMRC’s business and operations and how the Department is currently performing against its Public Service Agreement (PSA) targets. These are the operational targets set by the Government by which Departmental progress is measured.

Key achievements include:

  • A rise in tax revenues for the second consecutive year, HMRC collected net receipts of £423bn from taxes, duties and other revenue. An increase of £25bn on the previous year. Increased earnings saw the monies collected through Income Taxes and National Insurance rise by £14bn, nominal spending growth led to a rise of £4.5bn in VAT receipts and an increase in receipts from onshore companies saw the Corporation Tax yield rise by £2.5bn.
  • Marked progress in detecting and disrupting organised VAT fraud, with 14 criminal prosecutions concluded in 2006-07, resulting in 45 convictions and jail sentences totalling 149 years. HMRC has further strengthened operational activity in this area and combined with the Government's new Reverse Charge arrangements we have made the UK a much tougher market for these fraudsters to operate in.
  • Further reductions in the administrative burden for business. By understanding and being more responsive to the needs of our customers we continue to reduce the burden on UK companies. At April 2007 HMRC have delivered a reduction in the administrative burden from Forms and Returns estimated at £130mn (net) and an estimated reduction of £43mn in the burden from Audits and Inspections, this represents excellent progress towards the targets set by the Government in the 2006 Budget.
  • Increases in the uptake of online services. A key to reducing the administrative burden is increasing the number of facilities and services available online. Pension schemes, Stamp Duty Land Tax and the New Construction Industry Scheme can all now be managed online and HMRC's self assessment online service saw another signifi cant rise in use (2.9mn returns online - representing almost one third of all returns). The system remained robust and operative throughout the peak fi ling period which, at its height, saw HMRC receiving almost two returns every second.

Copies of the current report are available from the HMRC website at: HMRC Spring 2007 Departmental Report (PDF 870K)

Government News Network

11. Biofuels

The use of biofuels to power cars, supply electricity etc is a growing business area. New technology means cooking oil can be used in cars and lorries with minimal conversion to the engine and works out about 20p /litre cheaper. There are many issues in relation to excise duty and VAT, and HMRC have a number of useful notices to read as a starting point.

12. Self assessment and tax equalised employees

HMRC have published a revised version of Help Sheet IR212 for the Employment Pages of the 2006/07 tax return. Help Sheet IR212 is intended to assist professional advisers and employers who prepare tax returns for tax equalised individuals by providing amended instructions for certain boxes on the Employment pages. The online version can be downloaded from

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.