Income Tax Act 2007 section 809VG

Income or gains treated as remitted following certain events

Section 809VG explains when foreign income or gains that were originally sheltered from being treated as remitted to the UK (because they were used to make a qualifying business investment) lose that protection, and become treated as remitted — typically because something goes wrong with the investment and the taxpayer does not take the required corrective steps in time.

• Foreign income or gains used for a qualifying investment and initially treated as not remitted will be treated as remitted to the UK if a potentially chargeable event occurs and the appropriate mitigation steps are not completed within the allowed grace period.
• The amount treated as remitted (the "affected income or gains") is proportionate to the part of the investment affected — for example, if half the holding is disposed of, half the sheltered income or gains are affected; if the company ceases to be an eligible trading company, the entire investment is affected.
• Where an investment is made partly with qualifying foreign funds and partly with other money, it is split into two separate investments, and the business investment relief rules apply only to the qualifying portion.
• Where multiple potentially chargeable events affect the same investment over time, amounts already dealt with through earlier remittance charges, mitigation steps, or tax deposits are excluded from subsequent calculations, preventing double counting.

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