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HMRC have clarified how FA 2012 Sch 12 part 2 works for investments funded by loans subsequently repaid using offshore income and gains.
The department confirmed that using foreign income and gains to repay loans that have funded investments made after 6 April 2012 would in principle qualify for business investment relief the Chartered Institute of Taxation's technical committee reported.
Concerns had been expressed because ITA 2007 s 809VA(1)(b) gives relief only where (in the absence of the relief) income or chargeable gains would be regarded as remitted by virtue of the investment.
Where borrowed monies are used to make the investment it is not the investment that (in the absence of the relief) triggers the remittance; the trigger is the subsequent repayment of the borrowing.
The Revenue said it takes a wide view of the meaning of ‘by virtue of’ in this context ...
