Income Tax Act 2007 section 809VI

The appropriate mitigation steps

Section 809VI sets out the steps a remittance basis taxpayer must take after a potentially chargeable event occurs in relation to a business investment, in order to prevent the affected income and gains from being treated as remitted to the UK.

• Where the potentially chargeable event is a disposal, the entire disposal proceeds must be taken offshore or reinvested; for any other type of event, the individual must dispose of the whole remaining holding and take the proceeds offshore or reinvest them
• The amount that must be taken offshore or reinvested is capped at "X" — the sum originally invested, reduced by amounts previously treated as remitted, previously taken offshore or reinvested, or used to make a qualifying tax deposit in connection with earlier chargeable events on the same investment
• Proceeds count as "reinvested" if they are used to make another qualifying investment in the same or a different company, including share-for-share exchanges
• Where the chargeable event is a breach of the extraction of value rule during the winding-up or dissolution of the target company, there is no requirement to dispose of the holding, and references to disposal proceeds are read as the value received