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101 | Transitional provision |
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(1) | This section has effect only in relation to— |
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(a) | payments of interest made on or after 1st January 2004 but before the |
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coming into force of the first regulations under section 95, and |
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(b) | payments of royalties made on or after 1st January 2004 but before the |
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(2) | Anything done by a person— |
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(a) | before 8th April 2004, and |
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(b) | in reliance on, and in accordance with, a provision of the published |
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draft Chapter or the published draft regulations, |
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| is to be treated as if it had been done under, and in accordance with, the |
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corresponding provision of this Chapter or of regulations under section 95. |
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(3) | Anything done by a person— |
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(a) | on or after 8th April 2004 but before the passing of this Act, and |
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(b) | in reliance on, and in accordance with, a provision of the published |
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Chapter or the published regulations, |
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| is to be treated as if it had been done under, and in accordance with, the |
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corresponding provision of this Chapter or of regulations under section 95. |
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(4) | During the period between the passing of this Act and the coming into force of |
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the first regulations under section 95, the published regulations shall have |
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effect as if they were regulations under that section. |
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| “the published draft Chapter” means the draft version of this Chapter |
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published by the Board on 10th December 2003; |
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| “the published draft regulations” means the draft version of regulations |
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under section 95 published by the Board on 10th December 2003; |
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| “the published Chapter” means the version of this Chapter appearing in |
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the Finance Bill as introduced in the House of Commons and published |
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| “the published regulations” means the draft version of regulations under |
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section 95 published by the Board on 8th April 2004. |
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Savings income: double taxation arising from withholding tax |
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(1) | This Chapter has effect for the purpose of giving relief from double taxation in |
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respect of special withholding tax. |
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(2) | Such relief is given— |
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(a) | by set-off against income tax or capital gains tax; |
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(b) | to the extent that it cannot be so set off, by repayment. |
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(3) | “Special withholding tax” means a withholding tax (however described) levied |
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under the law of a territory outside the United Kingdom implementing— |
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(a) | in the case of a member State, Article 11 of Council Directive 2003/48/ |
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EC of 3rd June 2003 on taxation of savings income in the form of interest |
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payments (“the Savings Directive”), or |
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(b) | in the case of a territory other than a member State, any corresponding |
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provision of international arrangements (whatever the period for |
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which the provision is to have effect). |
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(4) | “International arrangements”, in relation to a territory, means arrangements |
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made in relation to that territory with a view to ensuring the effective taxation |
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(a) | the law of the United Kingdom, or |
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(b) | that law and the law of that territory. |
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(5) | For the purposes of Part 18 of the Taxes Act 1988 (double taxation relief)— |
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(a) | relief from double taxation in respect of special withholding tax is not |
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to be available under Chapters 1 and 2 of that Part; and |
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(b) | special withholding tax is not to be regarded as foreign tax for the |
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purposes of Chapter 2 of that Part. |
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(6) | Sections 108 and 109 also make provision for implementing— |
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(a) | Article 13(2) of the Savings Directive (provision of certificate to avoid |
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levy of special withholding tax), and |
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(b) | any corresponding provision of international arrangements. |
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| “double taxation arrangements” means arrangements having effect by |
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virtue of section 788 of the Taxes Act 1988 (double taxation relief by |
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agreement with other territories); |
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| “international arrangements” has the meaning given by subsection (4); |
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| “the Savings Directive” has the meaning given by subsection (3)(a); |
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(a) | in the case of special withholding tax levied under the law of a |
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member State, has the same meaning as the expression “interest |
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payment” has for the purposes of the Savings Directive (see |
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Articles 6 and 15 of the Directive), and |
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(b) | in the case of special withholding tax levied under the law of a |
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territory other than a member State, has the same meaning as |
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the corresponding expression has for the purposes of the |
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international arrangements concerned; |
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| “special withholding tax” has the meaning given by subsection (3). |
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(8) | In the application of this Chapter in relation to capital gains tax, expressions |
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used in this Chapter and in the Taxation of Chargeable Gains Act 1992 (c. 12) |
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have the same meaning in this Chapter as in that Act. |
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Credit etc for special withholding tax |
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103 | Income tax credit etc for special withholding tax |
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(1) | This section applies where— |
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(a) | a person is chargeable to income tax for a year of assessment in respect |
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of a payment of savings income or would be so chargeable but for any |
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exemption or relief which has effect in respect of that payment, |
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(b) | special withholding tax is levied in respect of the payment, and |
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(c) | the person is resident in the United Kingdom for that year of |
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(2) | On the making of a claim, income tax (“the deemed tax”) of an amount equal |
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to the amount of the special withholding tax levied is to be treated as having |
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(a) | paid by or on behalf of the person for that year of assessment, and |
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(b) | deducted at source for that year of assessment for the purposes of the |
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provisions in subsection (3). |
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| section 7 of the Taxes Management Act 1970 (c. 9) (notice of liability to |
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income tax and capital gains tax); |
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| section 8 of that Act (personal return); |
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| section 8A of that Act (trustee’s return); |
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| section 9 of that Act (returns to include self-assessment); |
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| section 59A of that Act (payments on account of income tax); |
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| section 59B of that Act (payments of income tax and capital gains tax); |
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| section 824(3) of the Taxes Act 1988 (repayment supplements: |
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determination of relevant time). |
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(4) | Where the amount of the deemed tax exceeds the amount (which may be nil) |
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of income tax for which the person is liable for the year of assessment (before |
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any set-off for the deemed tax), then, to the extent that it would not otherwise |
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(a) | the excess is to be set against any capital gains tax for which he is liable |
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for the year of assessment, and |
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(b) | he is entitled to a repayment of income tax in respect of any remaining |
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(5) | But subsection (2) does not apply in relation to an amount of special |
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withholding tax levied if— |
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(a) | the person has obtained relief from double taxation in respect of that |
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special withholding tax under the law of a territory outside the United |
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(b) | the person was resident in that territory, or was treated as being so |
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resident under any double taxation arrangements, in the year of |
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104 | Capital gains tax credit etc for special withholding tax |
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(1) | This section applies where— |
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(a) | a person makes a disposal of assets in a year of assessment, |
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(b) | on the assumption that a chargeable gain were to accrue on the |
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(i) | it would accrue to the person, and |
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(ii) | he would be chargeable to capital gains tax in respect of it, |
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(c) | the consideration for the disposal consists of or includes an amount of |
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(d) | special withholding tax is levied in respect of the whole or any part of |
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the consideration for the disposal, and |
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(e) | the person is resident in the United Kingdom for that year of |
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(2) | For the purposes of subsection (1)(b)(ii), there are to be disregarded— |
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(a) | any deductions that fall to be made from the total amount referred to in |
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section 2(2) of the Taxation of Chargeable Gains Act 1992 (c. 12) |
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(deductions for allowable losses), |
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(b) | section 3 of that Act (annual exempt amount), and |
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(c) | section 77(1) of that Act (settlor with interest in settlement: trustees not |
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to be chargeable in certain circumstances). |
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(3) | On the making of a claim, capital gains tax (“the deemed tax”) of an amount |
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equal to the amount of the special withholding tax levied is to be treated as |
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(a) | by or on behalf of the person for that year of assessment, and |
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(b) | for the purposes of section 283(2) of the Taxation of Chargeable Gains |
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Act 1992 (repayment supplements: determination of relevant time), on |
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31st January next following that year of assessment. |
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(4) | For the purposes of the application of the following provisions in relation to the |
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person for that year of assessment, references in those provisions to income tax |
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deducted at source for that year of assessment are to be taken to include the |
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amount of the deemed tax— |
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| section 7 of the Taxes Management Act 1970 (c. 9) (notice of liability to |
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income tax and capital gains tax); |
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| section 8 of that Act (personal return); |
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| section 8A of that Act (trustee’s return); |
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| section 9 of that Act (returns to include self-assessment); |
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| section 59B of that Act (payments of income tax and capital gains tax). |
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(5) | Where the amount of the deemed tax exceeds the amount (which may be nil) |
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of capital gains tax for which the person is liable for the year of assessment |
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(before any set-off for the deemed tax), then, to the extent that it would not |
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(a) | the excess is to be set against any income tax for which he is liable for |
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the year of assessment, and |
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(b) | he is entitled to a repayment of capital gains tax in respect of any |
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remaining balance of that excess. |
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(6) | But subsection (3) does not apply in relation to an amount of special |
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withholding tax levied if— |
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(a) | the person has obtained relief from double taxation in respect of that |
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special withholding tax under the law of a territory outside the United |
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(b) | he was resident in that territory, or was treated as being so resident |
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under any double taxation arrangements, in the year of assessment in |
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(7) | To the extent that section 103 of this Act applies in relation to an amount of |
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special withholding tax levied (or would so apply on the making of a claim), |
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this section does not apply in relation to that amount. |
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