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

Exemption for double taxation on amounts within same control group

Section 608MC provides relief from double taxation where two individuals in the same control group both generate UK-sourced income from related intangible property rights, and one individual's income derives from payments made by the other.

• Both individuals (A and B) must be in the same control group for the entire tax year, and neither may be involved in a tax avoidance scheme at any point during the year.
• Individual A must be charged income tax under section 608A on a UK-sourced amount, with no relief available, and that amount must also represent a direct or indirect payment from B to A connected to intangible property rights that B holds but which originate from A's intangible assets.
• When calculating B's own tax charge under section 608A, the UK-sourced amount generated by B in respect of those related rights is reduced by A's UK-sourced amount (but cannot be reduced below zero), thereby preventing the same economic value from being taxed twice.
• Where a UK-sourced amount relates partly to the relevant rights and partly to something else, only a fair and reasonable proportion is taken into account for the purposes of this relief.

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