Income Tax (Trading and Other Income) Act 2005 section 188

Application of Chapter

Section 188 defines when the unremittable income relief provisions apply to trading income that is trapped overseas due to foreign exchange restrictions.

• The relief applies where a trading receipt has been included in the profit calculation but the amount, paid or owed in a territory outside the United Kingdom, cannot be brought back to the UK due to foreign exchange restrictions.
• An amount already received overseas is unremittable if foreign exchange restrictions prevent it from being transferred to the United Kingdom.
• An amount still owed is unremittable if it cannot be paid in the UK and either cannot temporarily be paid locally, or if paid locally could not then be transferred to the UK, in both cases solely because of foreign exchange restrictions.
• Foreign exchange restrictions are defined as restrictions arising from the laws of the overseas territory, executive action by its government, or the impossibility of obtaining currency in that territory that could be transferred to the United Kingdom.