INTM620710 - Offshore Receipts in respect of Intangible Property (ORIP): Glossary of terms: Meaning of arising

ITTOIA05/Ch2A/S608B

Tax is charged under section 608A on the full amount of the UK-derived amounts arising in the tax year. The person who is liable under section 608A is the person receiving or entitled to the UK-derived amounts. It does not matter that the amounts relate to UK sales made in that tax year or any other tax year, including sales made before 6 April 2019.

The word ‘arising’ has been the subject of a number of tax cases. Arising includes when it is received or made available to the recipient, such as amounts credited to bank accounts (Parkside Leasing v Smith 58 TC 282). However, arising has a wider meaning than this. For example, it was held in Dunmore v McGowan (52 TC 307) to include the swelling of a person’s assets.

In view of the wide meaning given to arising, it is HMRC’s view that UK-derived amounts arising to a person in a tax year should include amounts received and amounts to which the person is entitled including where amounts become receivable by the person.

The legislation does not refer to accounting principles in determining when amounts arise, and therefore the calculation of income arising may differ from amounts recognised for accounting purposes.

Where amounts are received or become receivable by a chargeable person after 5 April 2019 such amounts are chargeable regardless of whether the UK sales were made before 6 April 2019.

The same UK-derived amounts are not chargeable more than once where a person receives or becomes entitled to the amount on different dates in the same or a different tax year after 5 April 2019.