Income Tax (Earnings and Pensions) Act 2003 section 554Z11C

Earlier income tax liability: treatment of payments

Section 554Z11C sets out how double taxation relief is calculated and given where a Part 7A (disguised remuneration) charge overlaps with an earlier income tax liability on the same sum or asset.

• Where there is an overlap between an earlier tax charge and a later Chapter 2 charge on the same sum or asset, the overlapping portion of each charge is determined on a just and reasonable basis
• Payments made towards the earlier overlapping charge (including late payment interest) are automatically treated as payments on account of the later Chapter 2 overlapping charge, and vice versa
• Where a single Chapter 2 charge overlaps with multiple earlier liabilities, the amount paid towards the Chapter 2 charge is apportioned across each of the individual earlier overlapping charges on a just and reasonable basis
• Once the principal tax on an overlapping charge has been fully paid, any remaining credit from the corresponding payment is applied against late payment interest on that charge

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