|
| |
|
(3) | Each partner in the partnership must be— |
| |
(a) | a person or body mentioned in section 869, or |
| |
(b) | a person or body to whom one of subsections (4) to (6) applies. |
| |
(4) | This subsection applies to a UK resident company. |
| |
(5) | This subsection applies to a company that— |
| 5 |
| |
(b) | carries on a trade in the United Kingdom through a permanent |
| |
| |
(c) | is required to bring into account, in calculating its chargeable profits |
| |
(within the meaning of section 11(2) of ICTA), the whole of any share of |
| 10 |
the payment that is attributable to it because of sections 114 and 115 of |
| |
| |
(6) | This subsection applies to the European Investment Fund. |
| |
(7) | The Treasury may by order amend this section to add to, restrict or otherwise |
| |
alter the persons or bodies falling within subsection (3)(b). |
| 15 |
Incorrect belief that payment is an excepted payment |
| |
871 | Consequences of reasonable but incorrect belief |
| |
(1) | This section applies if— |
| |
(a) | a payment is made by a company, local authority or qualifying |
| |
partnership without a sum representing income tax on the payment |
| 20 |
| |
(b) | at the time the payment is made, the company, authority or partnership |
| |
reasonably believes that it is an excepted payment, |
| |
(c) | one of the duties to deduct sums representing income tax mentioned in |
| |
section 863(2) would apply to the payment if the company did not so |
| 25 |
| |
(d) | the payment is not an excepted payment at the time it is made. |
| |
(2) | This Part has effect in relation to the payment as if section 863(1) had never |
| |
disapplied the duties to deduct mentioned in section 863(2). |
| |
| 30 |
| |
872 | Duty to retain bonds where issue treated as payment of interest |
| |
(1) | This section applies if— |
| |
(a) | there is an issue of funding bonds to a creditor in respect of a liability |
| |
to pay interest on a debt incurred by a government, public institution, |
| 35 |
other public authority or body corporate, |
| |
(b) | by virtue of section 582(1)(a) of ICTA or section 380 of ITTOIA 2005, the |
| |
issue is treated as if it were a payment of an amount of interest (“the |
| |
| |
|
| |
|
| |
|
(c) | the person by or through whom the bonds are issued is required, under |
| |
this Part, to deduct a sum representing income tax from the deemed |
| |
| |
(2) | The person by or through whom the bonds are issued must retain bonds the |
| |
value of which is, at the time of their issue, equal to income tax on the deemed |
| 5 |
interest at the savings rate in force for the tax year in which the bonds are |
| |
| |
(3) | A person who retains bonds in accordance with subsection (2) is treated as |
| |
complying with the duty to deduct a sum representing income tax from the |
| |
| 10 |
(4) | The person may tender the bonds retained in satisfaction of any income tax to |
| |
be collected from the person in respect of the deemed interest under Chapter |
| |
| |
(5) | But see section 873 for provision about circumstances where it is impracticable |
| |
to retain bonds in accordance with subsection (2). |
| 15 |
(6) | In this Chapter “funding bonds” includes any bonds, stocks, shares, securities |
| |
or certificates of indebtedness. |
| |
873 | Exception from duty to retain bonds |
| |
(1) | This section applies if an issue of funding bonds is treated as a payment of |
| |
interest (“the deemed interest”) as mentioned in section 872(1) and— |
| 20 |
(a) | the person by or through whom the bonds are issued is required to |
| |
retain bonds under section 872(2), but |
| |
(b) | it is impracticable for the person to do so. |
| |
(2) | The duty to deduct a sum representing income tax from the deemed interest |
| |
under this Part does not apply if the person tells the Commissioners for Her |
| 25 |
Majesty’s Revenue and Customs— |
| |
(a) | the names and addresses of the persons to whom the bonds have been |
| |
| |
(b) | the amount of the bonds issued to each person. |
| |
| 30 |
(a) | the duty to retain bonds under section 872(2) does not apply, and |
| |
(b) | the provisions in Chapters 15 and 16 about the collection of income tax |
| |
in respect of the deemed interest do not apply. |
| |
| |
| 35 |
874 | Deemed payments to unit holders and deemed deductions of income tax |
| |
(1) | Subsections (2) and (3) apply if a unit holder in an unauthorised unit trust is |
| |
treated under Chapter 10 of Part 4 of ITTOIA 2005 (distributions from |
| |
unauthorised unit trusts if the trustees are UK resident) as having received |
| |
| 40 |
|
| |
|
| |
|
(2) | The trustees are treated as making on that date a payment to the unit holder |
| |
representing the gross amount of the income (see section 548(2) of ITTOIA |
| |
| |
(3) | The trustees are also treated as deducting from that payment a sum |
| |
representing income tax on the gross amount of the income at the basic rate for |
| 5 |
the tax year in which the payment is made. |
| |
(4) | Subsection (5) applies if the trustees of an unauthorised unit trust are treated |
| |
under section 469(4A) of ICTA (distributions from unauthorised unit trusts if |
| |
the trustees are UK resident) as making an annual payment to a unit holder. |
| |
(5) | The trustees are also treated as deducting from the annual payment a sum |
| 10 |
representing income tax on its gross amount (see section 469(4C) of ICTA) at |
| |
the basic rate for the tax year in which the payment is made. |
| |
| |
“deemed deduction” means a deduction within subsection (3) or (5), |
| |
“deemed payment” means a payment within subsection (2) or (4), and |
| 15 |
“the gross amount” means, in relation to a deemed payment, the amount |
| |
of the payment before the deemed deduction is made from it. |
| |
875 | Income tax to be collected from trustees |
| |
(1) | This section applies if in a tax year the trustees of an unauthorised unit trust are |
| |
treated as making deemed payments. |
| 20 |
(2) | Income tax is to be collected through the trustees’ self-assessment return for the |
| |
tax year (see Chapter 17). |
| |
(3) | The amount of income tax to be collected (“the collectable amount”) is the |
| |
amount equal to the sum of the deemed deductions from the deemed |
| |
| 25 |
(4) | But if the sum of the gross amounts of the deemed payments exceeds the |
| |
trustees’ modified net income for the tax year (see section 958), the collectable |
| |
amount is the amount calculated by taking the steps in subsection (5). |
| |
(5) | The steps to be taken are as follows. |
| |
| 30 |
| |
| Take the amount equal to the sum of the gross amounts of the deemed |
| |
payments and reduce that amount by— |
| |
(a) | the amount of the trustees’ income pool as at the start of the tax year |
| |
| 35 |
(b) | if less, the amount by which the sum of the gross amounts of the |
| |
deemed payments exceeds the trustees’ modified net income. |
| |
| |
| |
| Apply the basic rate for the tax year to the result from Step 1. |
| 40 |
876 | Calculation of trustees’ income pool |
| |
(1) | This is how the amount of the trustees’ income pool as at the start of a tax year |
| |
(“the current tax year”) is calculated. |
| |
|
| |
|
| |
|
| The calculation to be used depends on which of the following cases applies. |
| |
| But this needs to be read with subsections (2) and (3). |
| |
| |
| |
| This case applies if the trustees’ modified net income for the previous tax year |
| 5 |
exceeded the sum of the gross amounts of the deemed payments treated as |
| |
made by the trustees in that year. |
| |
| The trustees’ income pool as at the start of the current tax year is the sum of— |
| |
(a) | the amount of the trustees’ income pool as at the start of the previous |
| |
| 10 |
(b) | the amount by which the trustees’ modified net income for the previous |
| |
tax year exceeded the sum of the gross amounts of the deemed |
| |
payments treated as made by the trustees in that year. |
| |
| |
| 15 |
| This case applies if the trustees’ modified net income for the previous tax year |
| |
was less than the sum of the gross amounts of the deemed payments treated as |
| |
made by the trustees in that year. |
| |
| The trustees’ income pool as at the start of the current tax year is— |
| |
(a) | the amount of the trustees’ income pool as at the start of the previous |
| 20 |
| |
(b) | the amount of the reduction made at Step 1 in section 875(5) for the |
| |
purpose of calculating the collectable amount for the previous tax year. |
| |
| |
| 25 |
| This case applies if the trustees’ modified net income for the previous tax year |
| |
equalled the sum of the gross amounts of the deemed payments treated as |
| |
made by the trustees in that year. |
| |
| The trustees’ income pool as at the start of the current tax year is the same as |
| |
the amount of the trustees’ income pool as at the start of the previous tax year. |
| 30 |
(2) | If the trustees were non-UK resident for the previous tax year, references in |
| |
subsection (1) to the previous tax year are to be read as references to the last tax |
| |
year prior to the current tax year for which the trustees were UK resident. |
| |
(3) | The income pool as at the start of the current tax year is nil if— |
| |
(a) | the current tax year is the tax year during which the unauthorised unit |
| 35 |
| |
(b) | the trustees have been UK resident for no tax year prior to the current |
| |
| |
| |
Tax avoidance: directions for duty to deduct to apply |
| 40 |
877 | Directions for deduction from payments to non-UK residents |
| |
(1) | This section applies if it appears to an officer of Revenue and Customs that any |
| |
person entitled to an amount taxable under— |
| |
(a) | Chapter 3 of Part 12 (tax avoidance: transactions in land), or |
| |
(b) | Chapter 4 of that Part (tax avoidance: sales of occupation income), |
| 45 |
|
| |
|
| |
|
| |
(2) | The officer may, in relation to any payment forming the whole or part of that |
| |
amount, direct that the person by or through whom the payment is made must, |
| |
on making it, deduct from it a sum representing income tax on it at the basic |
| |
rate in force for the tax year in which the payment is made. |
| 5 |
(3) | Subsection (2) does not affect the final liability of the person entitled to the |
| |
amount mentioned in subsection (1) including any liability under section |
| |
701(4) or 719(4) (recovery of tax where consideration receivable by person not |
| |
| |
(4) | For provision about the collection of income tax in respect of a payment from |
| 10 |
which a sum must be deducted under subsection (2)— |
| |
(a) | see Chapter 15 if the person making the payment is a UK resident |
| |
| |
(b) | otherwise see Chapter 16. |
| |
| 15 |
Collection: deposit-takers, building societies and certain companies |
| |
| |
| |
(1) | This Chapter provides— |
| |
(a) | for persons who have made payments within section 879 (“section 879 |
| 20 |
payments”) to make returns of the payments, and |
| |
(b) | for the collection of income tax in respect of those payments. |
| |
(2) | Sections 880 and 881 contain definitions and other provisions in relation to the |
| |
following basic concepts used in the Chapter: “return period” and “accounting |
| |
| 25 |
(3) | Section 882 requires persons who have made section 879 payments to deliver |
| |
returns of those payments made in return periods falling within accounting |
| |
periods, and section 883 requires such persons to deliver returns of those |
| |
payments made otherwise than in accounting periods. |
| |
(4) | Section 884 explains— |
| 30 |
(a) | how much income tax is due from persons in respect of section 879 |
| |
payments made by them, and |
| |
(b) | when that income tax must be paid. |
| |
(5) | Sections 885 to 888 allow persons who have made section 879 payments to |
| |
make claims for income tax they have suffered to be set off against income tax |
| 35 |
payable by them in respect of the payments. |
| |
(6) | Sections 889 to 893 explain what happens in cases where income tax payable in |
| |
respect of section 879 payments is not paid when it is due, or where returns are |
| |
| |
(7) | Sections 894 and 895 contain supplementary provisions. |
| 40 |
|
| |
|
| |
|
(8) | For further provisions applying to returns and set-off claims under this |
| |
Chapter, see TMA 1970 (in particular section 113(1) (returns) and section 42 |
| |
and Schedule 1A (claims)). |
| |
879 | Payments within this section |
| |
The payments within this section are— |
| 5 |
(a) | a payment from which a deposit-taker or building society is required to |
| |
deduct a sum representing income tax under section 784, |
| |
(b) | a payment from which a UK resident company is required to deduct a |
| |
sum representing income tax under— |
| |
(i) | section 807(2) (payments of yearly interest), |
| 10 |
(ii) | section 822(4) (payments in respect of building society |
| |
| |
(iii) | section 825(2) (certain payments of UK public revenue |
| |
| |
(iv) | section 834(4) (annual payments made by persons other than |
| 15 |
| |
(v) | section 836(7) (patent royalties), |
| |
(vi) | section 839(5) (royalty payments etc where the owner lives |
| |
| |
(vii) | section 843(2) (proceeds of a sale of patent rights paid to non- |
| 20 |
| |
(viii) | section 861(2) (chargeable payments connected with exempt |
| |
| |
(ix) | section 877(2) (directions for deduction from payments to non- |
| |
| 25 |
(c) | a payment from which a company is required to deduct a sum |
| |
representing income tax under section 852(2) (manufactured interest on |
| |
UK securities: payments by UK residents etc). |
| |
| |
(1) | For the purposes of this Chapter, the return periods which fall within a |
| 30 |
person’s accounting period are determined as follows. |
| |
(2) | If at least one quarter date falls within the accounting period, each of the |
| |
following is a return period which falls within the accounting period— |
| |
(a) | any complete quarter which falls within the accounting period, and |
| |
(b) | any part of the accounting period which is not a complete quarter and |
| 35 |
| |
(i) | ends with the first (or only) quarter date in that period, or |
| |
(ii) | begins immediately after the last (or only) quarter date in that |
| |
| |
(3) | If no quarter date falls within the accounting period, the accounting period |
| 40 |
itself is to be treated as a return period which falls within the accounting |
| |
| |
| |
“quarter” means a period of three months ending— |
| |
(a) | unless paragraph (b) applies, with the last day of March, June, |
| 45 |
September or December, or |
| |
|
| |
|
| |
|
(b) | if the person mentioned in subsection (1) is a building society, |
| |
with the last day of February, May, August or November, and |
| |
| |
(a) | unless paragraph (b) applies, the last day of March, June, |
| |
September or December, or |
| 5 |
(b) | if the person mentioned in subsection (1) is a building society, |
| |
the last day of February, May, August or November. |
| |
881 | Meaning of “accounting period” |
| |
(1) | In this Chapter “accounting period”, in relation to a deposit-taker who is not a |
| |
company, means a period for which the deposit-taker’s accounts are drawn up. |
| 10 |
| “Deposit-taker” has the same meaning as in Chapter 2 (see section 786). |
| |
(2) | See section 12 of ICTA (basis of, and periods for, assessment) for provision |
| |
about accounting periods of companies. |
| |
| |
882 | Payments in an accounting period |
| 15 |
(1) | This section applies if a person makes a section 879 payment on a date which |
| |
falls within an accounting period of the person. |
| |
(2) | The person must deliver a return to an officer of Revenue and Customs for each |
| |
| |
(a) | which falls within the accounting period, and |
| 20 |
(b) | in which the person makes a section 879 payment. |
| |
(3) | The person must deliver the return within 14 days after the end of the return |
| |
period to which it relates. |
| |
(4) | The return must show the amount of— |
| |
(a) | any section 879 payments made by the person in the return period, and |
| 25 |
(b) | the income tax payable by the person in respect of those payments (see |
| |
| |
883 | Payments otherwise than in an accounting period |
| |
(1) | This section applies if a person makes a section 879 payment on a date which |
| |
does not fall within an accounting period of the person. |
| 30 |
(2) | The person must deliver a return to an officer of Revenue and Customs within |
| |
14 days after the date on which the payment is made. |
| |
(3) | The return must show the amount of— |
| |
| |
(b) | the income tax payable by the person in respect of that payment (see |
| 35 |
| |
|
| |
|