HMRC has provided some helpful clarification regarding the new business investment relief where foreign income (or gains) can be brought to the UK to make a qualifying investment without it being treated as a remittance.
Despite some rather detailed rules and restrictions, this is a generous and flexible relief which applies where the income or gains would otherwise have been regarded as remitted to the UK by virtue of the investment.
An issue has arisen where the foreign funds are used to repay loans which had originally funded investments after 6 April 2012 which would in principle have qualified for the relief.
The perceived difficulty was that in these circumstances, it is not the investment which triggered the remittance but the subsequent repayment of the borrowings which had funded the investment and therefore the funds remitted would not seem to satisfy the requirement.
However, HMRC have confirmed that they take a wide view of the meaning of “by virtue of the investment” in this context and that relief would not be denied for this reason.