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

Exemption where business undertaken within territory of residence

Section 608K provides an exemption from the offshore receipts in respect of intangible property charge where substantially all of the activity generating UK-derived income takes place in the territory where the person receiving that income is resident.

• The exemption applies where the relevant person is resident in a territory for the whole tax year and all or substantially all of the activity relating to the intangible property — its creation, development, maintenance, and income generation — takes place in that same territory.
• There must be no relevant connection between the intangible property and any related person — meaning the property must not have been transferred from, derived from transfers by, or derived from property held by a related person.
• A claim must be made under this section for the exemption to apply; it is not given automatically.
• If all conditions are satisfied, the UK-derived amounts relating to that intangible property are not subject to the Chapter 2A charge for that tax year.

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