Income Tax Bill

House of Commons

Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 15 — Collection: deposit-takers, building societies and certain companies
438

Collection and payment of income tax
884
Collection and payment of income tax
(1)
Income tax in respect of a section 879 payment is due, from the person who
makes the payment, on the date by which the return on which the payment
must be included is required to be delivered.
5
(2)
The income tax due is equal to the sum which the person is required to deduct
from the payment under the applicable provision mentioned in section 879.
(3)
The income tax is payable by the person without an officer of Revenue and
Customs making any assessment.
Set-off
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885
Conditions for a set-off claim
(1)
A person who makes a section 879 payment may make a set-off claim if
conditions A and B are met at the end of a return period which falls within an
accounting period of the person.
(2)
Condition A is that in the return period the person has—
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(a)
made a section 879 payment, or
(b)
received a payment on which the person has suffered income tax by
deduction.
(3)
Condition B is that at the end of the return period there is—
(a)
a net amount of income tax suffered (see subsection (4)), and
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(b)
a net amount of income tax payable (see subsection (5)).
(4)
There is a net amount of income tax suffered at the end of a return period if—
(a)
the person has received any payments on which income tax has been
suffered by deduction in the return period or in any previous return
period which falls within the accounting period, and
25
(b)
the amount of income tax so suffered by the person on those payments
exceeds the amount of such income tax treated as repaid for the
accounting period to date as a result of any previous set-off claim.
(5)
There is a net amount of income tax payable at the end of a return period if—
(a)
the person has made any section 879 payments in the return period or
30
in any previous return period which falls within the accounting period,
and
(b)
the amount of income tax payable by the person in respect of those
payments exceeds the amount of such income tax treated as paid for the
accounting period to date as a result of any previous set-off claim.
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886
How a set-off claim works
(1)
A set-off claim is a claim for the net amount of income tax suffered at the end
of the return period to be set off against the net amount of income tax payable
at the end of the return period.
(2)
The effect of a claim is that, to the extent of the set-off—
40

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 15 — Collection: deposit-takers, building societies and certain companies
439

(a)
the income tax comprised in the net amount of income tax suffered is
treated as repaid, and
(b)
the income tax comprised in the net amount of income tax payable is
treated as paid.
(3)
Accordingly—
5
(a)
any liability of the person making the set-off claim to pay any of the
income tax treated as paid under subsection (2)(b) is discharged, and
(b)
any of that income tax which has been paid is to be repaid to the person.
(4)
A set-off claim must be made in a return under section 882 for the return
period.
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(5)
A return may be made under that section for the purposes of making a set-off
claim despite the fact that the person making the claim may not have made any
section 879 payments in the return period.
(6)
Income tax suffered which is taken into account in a set-off claim may not also
be taken into account for the purposes of—
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(a)
section 7(2) of ICTA (income tax deducted from payments to UK
resident company to be set off against corporation tax), or
(b)
section 11(3) of that Act (income tax deducted from payments to non-
UK resident company to be set off against corporation tax).
(7)
Income tax suffered by a deposit-taker is to be taken into account in a set-off
20
claim only if the payment on which the income tax is suffered is to be taken into
account in calculating the deposit-taker’s liability to corporation tax.

“Deposit-taker” has the same meaning as in Chapter 2 (see section 786).
887
Proceedings begun after a set-off claim is made
(1)
If a set-off claim has been made no proceedings for collecting income tax which
25
would have to be discharged if the claim were allowed may be brought until
the claim is finally determined.
(2)
Subsection (1) does not affect the date when the income tax is due.
(3)
Any income tax underpaid as a result of this section must be paid when the
claim is finally determined.
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(4)
In this section “proceedings” includes proceedings by way of distraint or
attachment.
888
Proceedings begun before a set-off claim is made
(1)
This section applies if—
(a)
a person has made a set-off claim, and
35
(b)
before the claim was made, proceedings were brought for collecting
income tax assessed, or interest on income tax assessed, under section
889 or 890.
(2)
No effect is to be given to the set-off claim so as to affect or delay the collection
or recovery of the income tax, or of interest on that income tax, until the claim
40
is finally determined.
(3)
Any income tax overpaid as a result of this section must be repaid when the
claim is finally determined.

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 15 — Collection: deposit-takers, building societies and certain companies
440

(4)
In this section “proceedings” includes proceedings by way of distraint or
attachment.
Assessments and errors
889
Assessments where section 879 payment included in return
(1)
This section applies if any income tax in respect of a section 879 payment which
5
is included in a return under this Chapter has not been paid at or before the
date mentioned in section 884.
(2)
An officer of Revenue and Customs may make an assessment on the person
who made the payment.
(3)
Income tax may be assessed under this section whether or not it has been paid
10
when the assessment is made.
890
Assessments in other cases
(1)
This section applies if an officer of Revenue and Customs thinks—
(a)
that there is a section 879 payment which should have been included in
a return under this Chapter and which has not been so included, or
15
(b)
that a return under this Chapter is otherwise incorrect.
(2)
An officer of Revenue and Customs may make an assessment, to the best of the
officer’s judgement, on the person who made the return, or who should have
made one.
891
Payer’s duty to deliver amended return
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(1)
This section applies if a person who has made a section 879 payment becomes
aware that—
(a)
anything which should have been included in a return delivered by the
person under this Chapter has not been so included,
(b)
anything which should not have been included in a return delivered by
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the person under this Chapter has been so included, or
(c)
any other error has occurred in a return delivered by the person under
this Chapter.
(2)
The person must deliver an amended return correcting the error to an officer
of Revenue and Customs without delay.
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(3)
If the person delivers an amended return such assessments, adjustments, set-
offs or payments or repayments of income tax as are necessary for achieving
the objective mentioned in subsection (4) must be made.
(4)
The objective is that the resulting liabilities to income tax (including interest on
unpaid or overpaid income tax) of the person or any other person are the same
35
as they would have been if a correct return had been delivered.
892
Application of Income Tax Acts provisions about time limits for assessments
(1)
This section deals with the application of the provisions of the Income Tax Acts
about time limits for making assessments.

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 15 — Collection: deposit-takers, building societies and certain companies
441

(2)
So far as the provisions refer or relate to—
(a)
the tax year for which an assessment is made, or
(b)
the year to which an assessment relates,

they apply to assessments under this Chapter despite the fact that an
assessment under this Chapter may relate to a return period which is not a tax
5
year.
(3)
Subsection (4) applies if an assessment under this Chapter relates to income tax
due in respect of a payment required to be included in a return for a return
period under section 882 (payments in an accounting period).
(4)
In that case, for the purposes of the provisions mentioned in subsection (1), the
10
assessment is treated as made for the tax year in which the return period ends.
(5)
Subsection (6) applies if an assessment under this Chapter relates to income tax
due in respect of a payment required to be included in a return under section
883 (payments otherwise than in an accounting period).
(6)
In that case, for the purposes of the provisions mentioned in subsection (1), the
15
assessment is treated as made for the tax year in which payment is made.
893
Further provisions about assessments
(1)
Income tax assessed on a person under this Chapter is due on the date
mentioned in section 884 and an appeal against the assessment does not affect
the date when the income tax is due under that section.
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(2)
On the determination of an appeal against an assessment under this Chapter
any income tax overpaid must be repaid.
(3)
Any income tax assessable under any one or more of the provisions of this
Chapter may be included in a single assessment if all the income tax is due on
the same date.
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Supplementary
894
Relationship between Chapter and Income Tax Acts powers
Nothing in this Chapter affects any powers conferred by the Income Tax Acts
for the recovery of income tax by means of an assessment or otherwise.
895
Power to make regulations modifying Chapter
30
(1)
The Commissioners for Her Majesty’s Revenue and Customs may by
regulations modify, replace or supplement any of the provisions of this
Chapter for the purpose of regulating the time and manner in which persons
making section 879 payments—
(a)
are to account for and pay income tax which is to be collected from
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them in respect of those payments, and
(b)
are to be repaid income tax in respect of payments received by them.
(2)
In particular, regulations under this section may, in relation to income tax for
which a person is liable to account,—
(a)
modify any provision of Parts 2 to 6 of TMA 1970, or
40
(b)
apply any such provision with or without modifications.

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 16 — Collection: certain payments by other persons
442

(3)
Regulations under this section may—
(a)
make different provision for different kinds of payer,
(b)
make different provision for different circumstances, and
(c)
authorise the Commissioners for Her Majesty’s Revenue and Customs,
if they think there are special circumstances justifying it, to make
5
special arrangements in relation to—
(i)
income tax for which a person is liable to account, or
(ii)
the repayment of income tax suffered by a person.
(4)
Regulations under this section may contain incidental, supplemental,
consequential and transitional provision and savings.
10
(5)
The Commissioners for Her Majesty’s Revenue and Customs must not make
any regulations under this section unless a draft of them has been laid before
and approved by a resolution of the House of Commons.
(6)
References in this Act and in any other enactment to any of the provisions of
this Chapter are to be read as references to those provisions as modified,
15
replaced or supplemented by provision made by regulations under this
section.
Chapter 16
Collection: certain payments by other persons
896
Collection of income tax on certain payments by other persons
20
(1)
This section makes provision for the collection of income tax in respect of—
(a)
a payment from which a person other than a UK resident company is
required to deduct a sum representing income tax under—
(i)
section 807(2) (certain payments of yearly interest),
(ii)
section 822(4) (payments in respect of building society
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securities),
(iii)
section 825(2) (certain payments of UK public revenue
dividends),
(iv)
section 834(4) (annual payments made by persons other than
individuals),
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(v)
section 836(7) (patent royalties),
(vi)
section 839(5) (royalty payments etc where the owner lives
abroad),
(vii)
section 843(2) (proceeds of a sale of patent rights paid to non-
UK residents),
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(viii)
section 861(2) (chargeable payments connected with exempt
distributions), or
(ix)
section 877(2) (directions for deduction from payments to non-
UK residents), and
(b)
a payment from which a person other than a company is required to
40
deduct a sum representing income tax under section 852(2)
(manufactured interest for UK securities: payments by UK residents
etc).
(2)
The person required to deduct the sum must deliver to an officer of Revenue
and Customs an account of the payment without delay.
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Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 18 — Other regimes involving the deduction of income tax at source
443

(3)
An officer of Revenue and Customs may make an assessment on that person
for income tax equal to the sum required to be deducted.
(4)
The provisions of the Income Tax Acts relating to—
(a)
persons chargeable to income tax,
(b)
income tax assessments, and
5
(c)
the collection and recovery of income tax,

apply (unless excluded expressly or by implication) to the assessment,
collection and recovery of income tax which is assessable on persons under this
section.
Chapter 17
10
Collection through self-assessment return
897
Collection through self-assessment return
(1)
This section applies if—
(a)
a person makes a payment from which the person is required to deduct
a sum representing income tax, and
15
(b)
income tax equal to the sum required to be deducted is, under section
833(3), 834(3) or 836(5) or (6), to be collected through the person’s self-
assessment return.
(2)
This section also applies if, in accordance with section 875, income tax is to be
collected through a trustee’s self-assessment return.
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(3)
The income tax is to be treated for the purposes of TMA 1970 as if it were
income tax charged on the person or trustee.
(4)
Accordingly, the income tax must be taken into account for the purposes of—
(a)
the person’s or trustee’s return under section 8 or 8A of TMA 1970, and
(b)
the person’s or trustee’s assessment to income tax under section 9 of
25
that Act,

(in addition to the person or trustee’s income tax liability calculated in
accordance with Chapter 3 of Part 2 (calculation of income tax liability)).
(5)
But the relevant amount under section 59A of TMA 1970 (payments on account
of income tax) is to be calculated as if the income tax were not taken into
30
account for the purposes of the assessment to income tax under section 9 of
TMA 1970.
Chapter 18
Other regimes involving the deduction of income tax at source
Visiting performers
35
898
Overview of sections 899 to 903
(1)
Sections 899 to 903 make provision for the payment of sums representing
income tax to the Commissioners for Her Majesty’s Revenue and Customs
where certain payments or transfers are made in connection with activities

Income Tax Bill
Part 14 — Deduction of income tax at source
Chapter 18 — Other regimes involving the deduction of income tax at source
444

performed in the United Kingdom by non-UK resident entertainers, sportsmen
and sportswomen.
(2)
See also—
section 556 of ICTA (entertainers and sportsmen) which makes provision
in relation to such payments or transfers for the purposes of
5
corporation tax,
Chapter 8 of Part 2 of ITEPA 2003 (application of provisions to workers
under arrangements made by intermediaries), in particular section
48(2) (exclusions from the scope of the Chapter), and
sections 13 and 14 of ITTOIA 2005 (trades and trade profits: visiting
10
performers).
899
Duty to deduct and account for sums representing income tax
(1)
This section applies if—
(a)
an entertainer, sportsman or sportswoman of a prescribed description
(“a performer”) who is non-UK resident for a tax year performs a
15
relevant activity in the United Kingdom in the tax year, and
(b)
a payment or transfer connected with the relevant activity is made.
(2)
It does not matter—
(a)
whether the payment or transfer is made to the performer or anyone
else, or
20
(b)
when the payment or transfer is made.
(3)
If a payment within subsection (1)(b) is made the person who makes the
payment must, on making it, deduct from it a sum representing income tax and
account to the Commissioners for Her Majesty’s Revenue and Customs for the
sum.
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(4)
If a transfer within subsection (1)(b) is made the person who makes the transfer
must account to the Commissioners for Her Majesty’s Revenue and Customs
for a sum representing income tax.
(5)
See section 900 as to the calculation of the sums representing income tax
mentioned in subsections (3) and (4).
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(6)
This section does not apply to payments or transfers of such a kind as may be
prescribed.
(7)
In this section—
(a)
“relevant activity” means an activity of a prescribed description, and
(b)
a payment or transfer is connected with a relevant activity if it has a
35
connection of a prescribed kind with that activity.
900
Calculation of sums representing income tax
(1)
The sums representing income tax mentioned in section 899(3) and (4) are to be
calculated in accordance with prescribed rules.
(2)
But the sums must not exceed the relevant proportion of the payment
40
concerned or of the value of what is transferred.

“Relevant proportion” means a proportion equal to the basic rate of income tax
for the tax year in which the payment or transfer is made.