|
| |
|
dividend to which section 121 of FA 2006 applied (distributions treated as UK |
| |
property business profits). |
| |
(4) | This section is subject to— |
| |
(a) | section 583 (manufactured payments exceeding underlying payments), |
| |
| 5 |
(b) | section 585 (power to deal with other special cases). |
| |
577 | Statements about manufactured dividends |
| |
(1) | Subsections (3) to (7) apply to a person who— |
| |
(a) | pays a manufactured dividend as mentioned in section 573(1), and |
| |
(b) | is not within the charge to corporation tax. |
| 10 |
(2) | But those subsections do not apply so far as the manufactured dividend is |
| |
representative of a dividend which is— |
| |
(a) | paid by a company to which Part 4 of FA 2006 applies (Real Estate |
| |
Investment Trusts) in respect of profits of C (tax-exempt), or |
| |
(b) | paid by the principal company of a group to which that Part applies in |
| 15 |
respect of profits of G (property rental business). |
| |
(3) | The person must, at the same time as paying the manufactured dividend, give |
| |
the recipient a statement. |
| |
(4) | The statement must set out— |
| |
(a) | the amount of the manufactured dividend, |
| 20 |
(b) | the date of its payment, and |
| |
(c) | the amount of associated tax credit. |
| |
(5) | The statement must be in writing. |
| |
(6) | The amount of associated tax credit is the amount of tax credit to which the |
| |
recipient, or a person claiming title through or under the recipient— |
| 25 |
(a) | is entitled in respect of the manufactured dividend as a result of section |
| |
573(2) of this Act or paragraph 2(3)(b) of Schedule 23A to ICTA |
| |
(manufactured dividend treated as dividend), or |
| |
(b) | would be so entitled if all the conditions for a tax credit had been met |
| |
in the case of the deemed dividend and the recipient or that person. |
| 30 |
(7) | The duty under subsection (3) to give a statement is enforceable by the |
| |
| |
(8) | For provisions corresponding to subsections (3) to (7) which apply if the payer |
| |
of a manufactured dividend is within the charge to corporation tax see— |
| |
(a) | section 234A of ICTA (by virtue of paragraph 2(2)(b) of Schedule 23A |
| 35 |
to ICTA), if the payer is a UK resident company, and |
| |
(b) | paragraph 2(6) to (8) of Schedule 23A to ICTA, if the payer is a non-UK |
| |
resident company within the charge to corporation tax. |
| |
(9) | For a power for regulations to make provision corresponding to subsections (3) |
| |
to (7) for a case within subsection (2), see section 973 as applied by section |
| 40 |
918(3) (and in particular section 974(1)(k)). |
| |
|
| |
|
| |
|
Manufactured interest on UK securities |
| |
578 | Manufactured interest on UK securities |
| |
(1) | This section applies if a person— |
| |
(a) | pays another person an amount (“manufactured interest”) which is |
| |
representative of a periodical payment of interest on UK securities, and |
| 5 |
(b) | does so under a requirement of an arrangement between them for the |
| |
transfer of the securities. |
| |
(2) | The Income Tax Acts apply in relation to the recipient, and persons claiming |
| |
title through or under the recipient, as if— |
| |
(a) | the manufactured interest were a periodical payment of interest on the |
| 10 |
| |
(b) | the gross amount of the deemed interest payment were equal to the |
| |
gross amount of the interest of which the manufactured interest is |
| |
| |
(3) | If the payer is UK resident, or a person acting in the course of a trade carried |
| 15 |
on in the United Kingdom through a branch or agency, the Income Tax Acts |
| |
apply in relation to the payer subject to sections 579 and 580 (allowable |
| |
| |
| |
section 919 (manufactured interest payments by UK residents etc: |
| 20 |
deduction of income tax at source), and |
| |
section 920 (foreign payers of manufactured interest: the reverse charge). |
| |
(5) | This section is subject to— |
| |
section 583 (manufactured payments exceeding underlying payments), |
| |
section 584 (manufactured payments less than underlying payments), and |
| 25 |
section 585 (power to deal with other special cases). |
| |
579 | Allowable deductions: matching |
| |
(1) | This section applies to a person who pays manufactured interest as mentioned |
| |
| |
(2) | The gross amount of the manufactured interest is allowable for income tax |
| 30 |
purposes as a deduction in calculating the net income of the payer (see Step 2 |
| |
of the calculation in section 23). |
| |
| This is subject to subsection (3). |
| |
(3) | It is allowable only so far as— |
| |
(a) | it is not otherwise deductible, and |
| 35 |
(b) | it falls within subsection (4), (6) or (7). |
| |
(4) | An amount falls within this subsection so far as the payer— |
| |
(a) | receives either the periodical payment of interest which is represented |
| |
by the manufactured interest or a payment which is representative of |
| |
the periodical payment of interest, and |
| 40 |
(b) | is chargeable to income tax on the payment received. |
| |
(5) | See section 679 (interest on securities involving accrued income losses: general) |
| |
for the amount chargeable to income tax in a case where that section applies. |
| |
|
| |
|
| |
|
(6) | An amount falls within this subsection so far as— |
| |
(a) | the payer is, by virtue of Chapter 2 of Part 12 (accrued income profits), |
| |
chargeable to income tax on qualifying accrued income profits in |
| |
respect of transfers of securities, and |
| |
(b) | the transfers are subject to the arrangement giving rise to the payment |
| 5 |
of manufactured interest. |
| |
(7) | An amount falls within this subsection so far as the payer— |
| |
(a) | is treated under section 607 (treatment of price differences under repos) |
| |
as receiving a payment of interest in respect of the securities, and |
| |
(b) | is chargeable to income tax on the payment. |
| 10 |
(8) | See section 580 for a further qualification to the rule in subsection (2). |
| |
(9) | For the purposes of subsection (3)(a) an amount is deductible if it is— |
| |
(a) | deductible in calculating any of the payer’s profits or gains for income |
| |
| |
(b) | deductible for those purposes in calculating the net income of the |
| 15 |
| |
(10) | In this section “qualifying accrued income profits” means accrued income |
| |
profits which are treated as made— |
| |
(a) | under section 628(5), or |
| |
(b) | under section 630(2) in respect of a transfer of variable rate securities. |
| 20 |
580 | Allowable deductions: restriction on double counting |
| |
(1) | This section applies if an amount has been allowed as a deduction under |
| |
section 579(2) by reference to the whole or part of— |
| |
(a) | the periodical payment of interest, or other payment, mentioned in |
| |
| 25 |
(b) | the sum mentioned in section 579(6)(a), or |
| |
(c) | the deemed payment of interest mentioned in section 579(7)(a). |
| |
(2) | No further deduction is allowable by reference to all or part of the matched |
| |
portion of the payment, sum or deemed payment. |
| |
(3) | The “matched portion” of the payment, sum or deemed payment means— |
| 30 |
(a) | the whole of it, if the amount has been allowed as a deduction by |
| |
reference to the whole of it, or |
| |
(b) | the part of it by reference to which the amount has been allowed as a |
| |
deduction, in any other case. |
| |
Manufactured overseas dividends |
| 35 |
581 | Manufactured overseas dividends |
| |
(1) | This section applies if— |
| |
(a) | a person (“the payer”) pays another person an amount (a |
| |
“manufactured overseas dividend”) which is representative of an |
| |
overseas dividend on overseas securities, |
| 40 |
(b) | the payer does so under a requirement of an arrangement between |
| |
them for the transfer of the securities, and |
| |
(c) | the condition in subsection (2) is met. |
| |
|
| |
|
| |
|
(2) | The condition is that— |
| |
(a) | in a case within section 922(1) (manufactured overseas dividends: |
| |
payments by UK residents etc), the amount required to be deducted as |
| |
a result of that section has been deducted, or |
| |
(b) | in a case within section 923(1) (foreign payers of manufactured |
| 5 |
overseas dividends: the reverse charge), the amount of income tax |
| |
required to be accounted for and paid as a result of that section has been |
| |
| |
(3) | Subsections (4) and (5) apply in relation to the recipient, and all persons |
| |
claiming title through or under the recipient, for all relevant income tax |
| 10 |
| |
(4) | The manufactured overseas dividend is treated as if it were— |
| |
(a) | an overseas dividend of an amount equal to the gross amount of the |
| |
manufactured overseas dividend, but |
| |
(b) | paid after the withholding from it, on account of overseas tax, of the |
| 15 |
amount deducted as a result of section 922 or (as the case may be) |
| |
accounted for and paid as a result of section 923. |
| |
(5) | The amount deducted or accounted for and paid is accordingly to be treated as |
| |
an amount withheld on account of overseas tax instead of as an amount on |
| |
| 20 |
(6) | In this section “relevant income tax purposes” means the purposes of the |
| |
Income Tax Acts as they apply in relation to— |
| |
| |
(b) | persons carrying on business through a branch or agency in the United |
| |
| 25 |
582 | Powers about manufactured overseas dividends |
| |
(1) | The Treasury may by regulations make provision as mentioned in subsections |
| |
(2) and (3) about prescribed cases where a person— |
| |
(a) | pays or receives a manufactured overseas dividend as mentioned in |
| |
| 30 |
(b) | is treated as doing so for any purposes of this Chapter or regulations |
| |
| |
(2) | The regulations may provide for removing or reducing any right of the person |
| |
to claim relief under Part 18 of ICTA (double taxation relief). |
| |
(3) | The regulations may provide for adjusting a relevant amount by reference to a |
| 35 |
provision which has effect under the law of a territory outside the United |
| |
| |
(4) | A “relevant amount” is an amount which is treated for prescribed income tax |
| |
purposes as the amount paid or payable to a person in respect of a relevant |
| |
| 40 |
(5) | A “relevant transaction” is a sale, repurchase or other transfer of the overseas |
| |
securities to which the manufactured overseas dividend relates. |
| |
|
| |
|