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Readers' Forum
Replies to Queries - 3
Paid on account - or not?
My client had a total liability for 1998-99 of £45,000. £34,000 of tax had been deducted at source through the pay-as-you-earn system and foreign tax had been paid (on Lloyd's underwriting income) of £3,000. Are payments on account due for 1999-2000?
Readers' Forum
Replies to Queries - 3
Paid on account - or not?
My client had a total liability for 1998-99 of £45,000. £34,000 of tax had been deducted at source through the pay-as-you-earn system and foreign tax had been paid (on Lloyd's underwriting income) of £3,000. Are payments on account due for 1999-2000?
The Inland Revenue manuals and legal framework publication SAT2 clearly states under 3.28 that the tax deducted at source for the purposes of section 59A(8), Taxes Management Act 1970 should include any foreign tax credits. Furthermore section 59B(7) indicates that references are to 'income tax deducted from any income or treated as paid on any income'. Even the tax return computation pages seem to deduct foreign tax before calculating whether payments on account are due.
Despite this, the Inspector has repeatedly stated that the Inland Revenue's view, confirmed by International Division, is that 'income tax' covered by the Taxes Management Act 1970 is not foreign tax and should not be included for the purposes of determining the 80 per cent rule. International Division has passed on its apologies for the error contained in Revenue publication SAT2!
Do readers agree with the Inspector?
(Query T15,774) - Credit Where Due.
