When is relief for unremittable amounts denied under section 190 of ITTOIA 2005?

Relief under section 189 is denied where the unremittable amount has been used to finance expenditure or investment outside the United Kingdom, where a bad or doubtful debt deduction under section 35 has already been claimed for the same amount, where the trader has received an insurance payout, or where unremittable income relief under section 842 is available instead.

Can a trader claim both a bad debt deduction and unremittable amount relief for the same sum under ITTOIA 2005?

No. Section 190 prevents double relief by denying a deduction under section 189 where a deduction has already been obtained under the bad and doubtful debts rules in section 35 for the same amount. A trader cannot claim relief twice — once as an irrecoverable debt and again as an unremittable amount.

Does having trade credit insurance automatically prevent a claim for unremittable amount relief under section 189?

No. The restriction under section 190 applies only where the trader has actually received a payment under an insurance contract in respect of the amount owed. Merely holding insurance cover without receiving a payout does not disqualify the claim. This differs from the earlier approach under Extra-Statutory Concession B38.

How does section 190 interact with unremittable income relief under section 842 of ITTOIA 2005?

Section 190 denies a deduction under section 189 where the trader could instead claim relief under section 842 for unremittable income. This is typically relevant where trade profits including unremittable amounts arise outside the United Kingdom, such as through an overseas branch. The purpose is to prevent the two reliefs from overlapping.

Income Tax (Trading and Other Income) Act 2005 section 190

Restrictions on relief

Section 190 sets out the circumstances in which relief for unremittable amounts under section 189 is restricted or denied entirely.

No relief is available where the unremittable amount has been used to finance expenditure, investment, or any other activity outside the United Kingdom.
No relief is available where a deduction for the same amount has already been claimed as a bad or doubtful debt under section 35.
No relief is available where the trader has received an insurance payout in respect of the amount owed.
No relief is available where the amount included in the profit calculation could instead be the subject of a claim for unremittable income relief under section 842.

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