267 Repayment of appropriate tax in certain cases

Summary

This section provides that, despite the general prohibition in section 261(b) on repayments of DIRT (except for companies within the charge to corporation tax in respect of relevant interest), repayments of DIRT deducted from relevant interest may be made to the trustees of a trust for a permanently incapacitated individual or individuals or to a charity. It also provides for repayment of DIRT to an individual who or whose spouse or civil partner is aged 65 years or over, or is permanently incapacitated, to the extent that such an individual (because of personal reliefs, age exemption, etc) would not otherwise be liable to tax in respect of the relevant interest.

Details

Definition

(1) A “relevant person” is an individual who can establish to the satisfaction of the inspector that —

• the individual or his/her spouse or civil partner is aged 65 years or over at any time during a year of assessment, or
• the individual or his/her spouse or civil partner was, throughout the year of assessment permanently incapacitated (or became so at some time in the year).

To qualify as permanently incapacitated an individual must prove that he/she or his/her spouse or civil partner is “permanently incapacitated by reason of mental or physical infirmity from maintaining himself or herself”.

The terms used are not defined in the Tax Acts and, in general, claims for repayment are evaluated on the grounds of permanent incapacity on the same basis as is currently adopted in dealing with claims under sections 465 (incapacitated children) and 466 (dependent relative).

Provided that it is obvious from the facts of the case that an individual or his/her spouse or civil partner comes within this category, the claim is to be accepted. Any person dissatisfied with a decision in regard to these matters may appeal to the Appeal Commissioners.

Repayments

(2) Any DIRT deducted from interest paid to the trustees of trusts which qualify for exemption from income tax under Schedule D by virtue of section 189A(2), or paid to a charity entitled to exemption from income tax under Schedule D by virtue of section 207 or from corporation tax by virtue of section 207 as applied for corporation tax purposes by section 76(6), is to be repaid.

(3) Where a relevant person (see subsection (1)) would be entitled to repayment of DIRT (including DIRT deducted from relevant interest which would have been included as part of his or her total income but for the provisions of section 189(2), section 189A(4) or section 192(2)) due to the amount of his/her income or to the operation of tax credits, personal reliefs, age exemption, loss relief, etc, the prohibition on the repayment of DIRT is not to apply. However, the repayment due under the provision is only made on the making of a claim and is not made until after the end of the year of assessment to which the deduction of DIRT relates.

Relevant Date: Finance Act 2019