Payments tangle

Our client is a Norwegian domiciled long-term UK resident. He is a consultant in the oil industry and has some overseas pension income. Normally he is taxed on an arising basis with a total annual income tax liability of about £30 000.

In January 2014 he made the normal payment on account of £15 000 from UK funds. In February 2014 he made a £1m capital gain overseas (which went into a clean overseas bank account for use abroad).

We decided to apply the remittance basis and submitted the 2014 tax return accordingly. Other overseas income from 2013/14 went into a different clean overseas account for use abroad.

His 2013/14 UK tax bill came to £8 000 plus the £50 000 remittance basis charge. We expected that the payment sequence would be two payments on account of £4 000 plus the (exempt amount) balance of £50...