Commentary

A2.103 Extra-territorial application of the direct tax code

Administration and compliance

A2.103 Extra-territorial application of the direct tax code

A2.103 Extra-territorial application of the direct tax code

The application of UK law to non-UK residents

Parliament is legislatively omnipotent, and consequently if by statute it imposes a tax upon any person or any property wherever that person or property may be situated, effect must be given to that statute by the courts. Nevertheless, it is recognised that by the comity of nations one state is not to be assumed to be making laws that infringe the sovereign rights of other states, and general words will not be so construed as to bring about such a result. The principle of territorial limitation is a general principle of statutory construction to the effect that UK legislation should only be applied to UK residents and:

'“foreigners who by coming into this country, whether for a long or short period of time, have made themselves during that time subject to English jurisdiction'1.'

It follows that income tax, therefore, will not be held to apply to persons abroad in respect of their income derived from sources out of the United Kingdom2; but this does not mean that a resident may not be taxed in respect of his income derived from property or possessions out of the United Kingdom or a non-resident in respect of his property or possessions in the United Kingdom. Indeed, the UK tax code taxes (a) income arising to a UK resident, wherever the income arises whether at home or abroad; and (b) income flowing from this country, no matter to whom it

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