Income Tax Act 2007 section 786

Recovery of tax where consideration receivable by person not assessed

Section 786 deals with how tax can be recovered when one person (A) is assessed to tax on consideration that is actually receivable by another person (B), including rights of reimbursement, direct recovery from B, and the treatment of occupation income as the highest part of total income.

• Person A, who is assessed to tax on consideration receivable by Person B, has the right to recover from B any tax that A has paid — consideration is only treated as receivable by B once B can effectively enjoy or dispose of it.
• If any tax remains unpaid six months after the due date, HMRC can recover it directly from Person B as though B were the person assessed, but this does not remove HMRC's right to pursue Person A as well.
• Any income an individual is treated as having under this chapter ("occupation income") is treated as the highest part of the individual's total income for tax calculation purposes.
• Where more than one capital amount counts as occupation income in the same tax year, or the individual also has income from transactions in land under Chapter 3, only a just and reasonable proportion of each capital amount is treated as the highest part of total income — section 1012 governs how this rule interacts with other similar rules.