Re1190 - Maintenance payments: Foreign Court Orders and Agreements

Maintenance paid under most foreign court orders or agreements did not attract tax relief before 1992-93. In certain very limited circumstances it could be used to reduce income assessable

• on an 'arising' basis under Cases IV and V of Schedule D or
• as foreign emoluments assessable under Case III of Schedule E.

As from 1992-93, however, relief is available for payments under court orders of member states of the European Community and under written agreements, the proper law of which is that of a part of such a state. As from 1 January 1994, relief is also available for payments under court orders of those member states of the European Free Trade Area, which formed the European Economic Area with the countries already in the European Community (the relevant date for Liechtenstein is 1 May 1995). And payments under written agreements, the proper law of which is that of a part of such a state can also qualify for relief. You will need to submit in most cases involving foreign court orders or agreements.

When a taxpayer claims relief for maintenance under a foreign court order, deed or agreement

• check the file to see whether you already hold a copy of the order or agreement or an earlier order or agreement in respect of the same husband or wife or child or children
• if you do not have a copy of the order or agreement under which the income is paid or received, ask for that order or agreement, or other documentation in which the payments were offered and agreed.

European union or european economic area states

• if the court order or agreement is that of a member state of the European Economic Area, obtain a translation (where necessary) from

Central Policy, International Group, Business Support Team

100 Parliament Street, London The European Economic Area includes (in addition to the United Kingdom, whose court orders and agreements are dealt at Re1160+)

• the European Community States -

Belgium
Cyprus
Czech Republic
Denmark
Estonia
France
Germany
Greece
Hungary
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Portugal
Republic of Ireland
Slovakia
Slovenia
Spain and

• six of the European Free Trade Area states -

Austria
Finland
Iceland
Liechtenstein
Norway
Sweden.

The Isle of Man and the Channel Islands are not part of the United Kingdom or member states of the European Community or Free Trade Area.

• When the translation is received, submit it and any earlier order or agreement in respect of same recipient (and any previous rulings on them), to PAYE & NIC Group in accordance with Re1100.
• If the court order/agreement is not that of a European Economic Area state or a part of such a state, only obtain any necessary translation from International Group, Business Support Team and submit to PAYE & NIC Group if

• the agreement is an original agreement made before 15 March 1988 and received by the Revenue by 30 June 1988, or
• the order or agreement is a later variation, replacement or supplement to an order or agreement detailed above, see Re1129, and
• relief has been given after 1987-88 by way of deduction from foreign emoluments within Case III of Schedule E under ICTA88/S192 (3) (SE4201 and SE4204) or from foreign income assessed on an `arising basis' (IM1575) under Case IV or V of Schedule D under either ICTA88/S65 or ICTA88/S68 (1)(b).

How to deal with oral agreements made before 15 march 1988

• If a claim is made in respect of maintenance paid under an oral agreement made outside the UK before 15 March 1988 which was written down and received in a Tax Office by 30 June 1988, some relief may be due if a deduction was allowed in 1988-89 from Case IV or V income, or from foreign emoluments. In such cases, the relevant documents and translations of them should have been obtained before or during 1988-89.

Submit the documents, translation and any earlier ruling on them to PAYE & NIC Group following Re1100.

• If any of these conditions do not apply, return the documents and tell the taxpayer that no relief is due. If the claimant persists, submit the case with a full report to PAYE & NIC Group following Re1100.