Who is liable for tax on UK-derived offshore intangible property income under section 608C?

Under section 608C of ITTOIA 2005, the person liable to income tax on UK-derived amounts is either the person who actually receives the UK-derived income or the person who is entitled to receive those amounts. This applies to offshore receipts in respect of intangible property, ensuring liability is clearly assigned to a specific individual or entity.

What is the purpose of section 608C of the Income Tax (Trading and Other Income) Act 2005?

Section 608C ensures that income connected to intangible property held outside the UK but generating value from UK sources does not escape the UK tax net. It identifies the taxpayer responsible for the Chapter 2A charge by attaching liability to the recipient or the person entitled to receive the UK-derived amounts.

Does section 608C apply to non-UK resident entities receiving royalties from the UK?

Yes. If a non-UK resident entity holds intangible property such as a patent offshore and receives royalties from UK-based operations, section 608C identifies that entity as the person liable for income tax on those UK-derived amounts. The tax charge under section 608A applies regardless of the recipient's location.

When was section 608C introduced and has it been amended?

Section 608C was introduced by Finance Act 2019 as part of the offshore receipts in respect of intangible property rules under Chapter 2A of ITTOIA 2005. It was subsequently amended by Finance Act 2025. The provision targets UK-derived income flowing to offshore holders of intellectual property and similar intangible assets.

Income Tax (Trading and Other Income) Act 2005 section 608C

Person liable for tax under section 608A

Section 608C identifies who is liable to pay income tax on UK-derived amounts arising from offshore receipts in respect of intangible property.

The tax charge under Chapter 2A falls on the person who actually receives the UK-derived income amounts.
Alternatively, the tax charge falls on the person who is entitled to receive those UK-derived amounts, even if they have not yet received them.
This ensures that liability is clearly assigned to a specific person in connection with the offshore intangible property income charge.
The provision was introduced by Finance Act 2019 and subsequently amended by Finance Act 2025.

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member