Readers’ forum: Method to claim foreign tax credit relief

Our client a UK resident individual is due to receive equal annual payments over three years following his retirement from an Italian managed and controlled international partnership.

The payment comprises an amount representing the disposal of goodwill and an amount for work in progress.

These payments will be taxed as income in Italy in the years of receipt. The UK tax liabilities – CGT and income tax – will arise in the year of retirement. This gives rise to a mismatch for double tax relief in that the payment of foreign tax is spread over three years. Can readers advise how best to make the claim for foreign tax credit relief?

Query 20 244 – Double Trouble.

There will be UK relief for the tax paid in Italy over a three-year period.

Article 24(2)(a) of the UK/Italy double tax agreement states: ‘Italian tax payable under the laws of...