|
| |
|
| |
583 | Manufactured payments exceeding underlying payments |
| |
(1) | This section applies if— |
| |
(a) | an amount paid by way of manufactured dividend would otherwise |
| |
exceed the amount of the dividend of which it is representative, or |
| 5 |
| |
(i) | an amount paid by way of manufactured interest or |
| |
manufactured overseas dividend, and |
| |
(ii) | the income tax required to be accounted for and paid in |
| |
connection with the making of the payment, |
| 10 |
| would otherwise exceed the gross amount of the interest or overseas |
| |
dividend of which it is representative. |
| |
(2) | The payment, to the extent of an amount equal to the excess, is treated for the |
| |
purposes of this Chapter and Chapter 9 of Part 15 as not made under the |
| |
requirement mentioned in section 573(1)(b), 578(1)(b) or 581(1)(b) (criteria for |
| 15 |
application of provisions about manufactured payments). |
| |
(3) | Instead it is treated, to that extent, for income tax purposes as a separate fee for |
| |
entering into the arrangement under which it was made. |
| |
(4) | Subsection (3) applies despite anything in— |
| |
(a) | sections 572 to 582 (main rules about manufactured payments), or |
| 20 |
(b) | Chapter 9 of Part 15 (deduction of income tax at source: manufactured |
| |
| |
584 | Manufactured payments less than underlying payments |
| |
(1) | This section applies if the sum of— |
| |
(a) | an amount paid by way of manufactured interest or manufactured |
| 25 |
| |
(b) | the income tax required to be accounted for and paid in connection |
| |
with the making of the payment, |
| |
| is less than the gross amount of the interest or overseas dividend of which it is |
| |
| 30 |
(2) | For the purpose of giving relief under the Income Tax Acts in a case to which |
| |
section 578 or 581 applies (manufactured interest and manufactured overseas |
| |
dividends), the gross amount of the manufactured interest or manufactured |
| |
overseas dividend is treated as being an amount equal to the sum of the |
| |
amounts mentioned in paragraphs (a) and (b) of subsection (1). |
| 35 |
(3) | Subsection (2) applies despite anything in— |
| |
(a) | sections 578 to 582 (main rules about manufactured interest and |
| |
manufactured overseas dividends), and |
| |
(b) | section 589(3) (meaning of “gross amount” of manufactured overseas |
| |
| 40 |
(4) | In this section “relief” means relief by way of— |
| |
(a) | deduction in calculating profits or gains, or |
| |
(b) | deduction or set off against income. |
| |
|
| |
|
| |
|
585 | Power to deal with other special cases |
| |
(1) | The Treasury may by regulations make provision about— |
| |
(a) | such manufactured dividends, manufactured interest or manufactured |
| |
overseas dividends as may be prescribed, |
| |
(b) | such persons who receive, or become entitled to receive, manufactured |
| 5 |
dividends, manufactured interest or manufactured overseas dividends |
| |
| |
(c) | such payers of manufactured dividends, manufactured interest or |
| |
manufactured overseas dividends as may be prescribed. |
| |
(2) | The provision which may be made is for any prescribed manufactured |
| 10 |
dividend, manufactured interest, manufactured overseas dividend or person |
| |
to be treated, in prescribed circumstances, otherwise than as mentioned in— |
| |
(a) | sections 572 to 582 (main rules about manufactured payments), or |
| |
(b) | Chapter 9 of Part 15 (deduction of income tax at source: manufactured |
| |
| 15 |
| for any prescribed income tax purposes. |
| |
General regulation-making powers |
| |
586 | Powers about administrative provisions |
| |
(1) | The Treasury may by regulations make provision about— |
| |
(a) | the accounts and other records which are to be kept, |
| 20 |
(b) | the vouchers which are to be issued or produced, |
| |
(c) | the returns which are to be made, and |
| |
(d) | the manner in which amounts required to be deducted, or accounted |
| |
for and paid, on account of income tax as a result of this Chapter or |
| |
Chapter 9 of Part 15 are to be accounted for and paid, |
| 25 |
| by payers or recipients of manufactured dividends, manufactured interest or |
| |
manufactured overseas dividends. |
| |
(2) | Regulations under this Chapter or Chapter 9 of Part 15 about any liability to |
| |
account for income tax may contain any of the following— |
| |
(a) | provision for calculating the amounts to be accounted for, |
| 30 |
(b) | provision, in relation to deciding the amount to be paid on any |
| |
occasion, for setting other amounts against the amounts to be |
| |
| |
(c) | provision as to the liabilities against which amounts accounted for are, |
| |
or are not, to be set for income tax purposes or corporation tax |
| 35 |
| |
(d) | provision modifying, or applying (with or without modifications), any |
| |
enactments contained in the Tax Acts. |
| |
(3) | The Treasury may by regulations provide for prescribed provisions of TMA |
| |
1970 to apply for income tax purposes in relation to— |
| 40 |
(a) | manufactured dividends, |
| |
(b) | manufactured interest, or |
| |
(c) | manufactured overseas dividends, |
| |
| with such modifications, specified in the regulations, as the Treasury consider |
| |
| 45 |
|
| |
|
| |
|
(4) | The Treasury may by regulations make further provision about the |
| |
administration, assessment, collection and recovery of amounts required to be |
| |
deducted, or accounted for and paid, on account of income tax as a result of— |
| |
| |
(b) | Chapter 9 of Part 15. |
| 5 |
587 | Power for manufactured payments to be eligible for relief |
| |
(1) | The Treasury may by regulations provide for any— |
| |
(a) | manufactured dividend, |
| |
(b) | manufactured interest, or |
| |
(c) | manufactured overseas dividend, |
| 10 |
| paid to any person to be treated, in such circumstances and to such extent as |
| |
may be prescribed in the regulations, as exempt pension income of the |
| |
| |
(2) | “Exempt pension income” means income which is eligible for relief from |
| |
income tax as a result of section 613(4) or 614(2), (3) or (4) of ICTA or section |
| 15 |
186 of FA 2004 (exemptions about pensions and annuities). |
| |
588 | Regulation-making powers: general |
| |
Regulations under this Chapter may make different provision for different |
| |
| |
| 20 |
589 | Meaning of “gross amount”: interest and manufactured overseas dividends |
| |
(1) | This section applies for the purposes of this Chapter. |
| |
(2) | The gross amount of any interest or payment is the amount of the interest or |
| |
payment before the making of any deduction of income tax that is required to |
| |
be deducted from it on its being paid or made. |
| 25 |
(3) | The gross amount of a manufactured overseas dividend is an amount equal to |
| |
the gross amount of the overseas dividend of which the manufactured |
| |
overseas dividend is representative. |
| |
(4) | The gross amount of an overseas dividend is the sum of— |
| |
(a) | so much of the overseas dividend as remains after the deduction of any |
| 30 |
overseas tax chargeable on it, |
| |
(b) | the amount of any overseas tax so deducted, and |
| |
(c) | the amount of any overseas tax credit in respect of the overseas |
| |
| |
590 | Meaning of “relevant withholding tax” |
| 35 |
(1) | This section applies for the purposes of this Chapter. |
| |
(2) | “Relevant withholding tax”, in relation to the gross amount of a manufactured |
| |
overseas dividend, means an amount of income tax representative of the sum |
| |
| |
|
| |
|
| |
|
(a) | any amount that would have been deducted by way of overseas tax |
| |
from an overseas dividend on the overseas securities of the same gross |
| |
amount as the manufactured overseas dividend, and |
| |
(b) | the amount of any overseas tax credit in respect of such an overseas |
| |
| 5 |
(3) | The Treasury may by regulations make provision about the rates of relevant |
| |
withholding tax which are to apply in relation to manufactured overseas |
| |
dividends in relation to different overseas territories. |
| |
(4) | The Treasury must, in prescribing these rates, have regard to— |
| |
(a) | the rates at which overseas tax would have fallen to be deducted, and |
| 10 |
(b) | the rates of overseas tax credits, |
| |
| in overseas territories, or in the particular overseas territory, in respect of |
| |
payments of overseas dividends on overseas securities. |
| |
591 | Interpretation of other terms used in Chapter |
| |
| 15 |
“C (tax-exempt)” has the meaning given by section 105(3) of FA 2006, |
| |
“G (property rental business)” has the meaning given by paragraph 2 of |
| |
| |
“group” and “principal company” have the meanings given by section 134 |
| |
| 20 |
“overseas tax” means tax under the law of a territory outside the United |
| |
| |
“overseas tax credit” means any credit under the law of a territory outside |
| |
the United Kingdom in respect of overseas tax which corresponds to a |
| |
| 25 |
“prescribed” means prescribed in regulations under this Chapter, and |
| |
“transfer” includes a sale or other disposal. |
| |
(2) | References in this Chapter to a trade carried on through a branch or agency are |
| |
to be read, in relation to a company, as references to a trade carried on through |
| |
a permanent establishment. |
| 30 |
| |
Tax credits: stock lending arrangements and repos |
| |
Stock lending arrangements |
| |
592 | No tax credits for borrower under stock lending arrangement |
| |
(1) | This section applies if— |
| 35 |
(a) | there is a stock lending arrangement in respect of UK shares, |
| |
(b) | a qualifying distribution is made to the person who is the borrower |
| |
| |
(c) | the qualifying distribution is, or is a payment representative of, a |
| |
dividend in respect of the UK shares, and |
| 40 |
|
| |
|
| |
|
(d) | a manufactured dividend representative of the dividend is paid by the |
| |
borrower in respect of any UK shares in respect of which the |
| |
| |
(2) | The borrower is not entitled to a tax credit under section 397(1) of ITTOIA 2005 |
| |
(tax credits for qualifying distributions) in respect of the distribution. |
| 5 |
(3) | If the borrower is UK resident, section 399(2) of ITTOIA 2005 (recipients of |
| |
qualifying distributions treated as having paid income tax at dividend |
| |
ordinary rate on them) does not apply in respect of the distribution. |
| |
| |
593 | No tax credits for interim holder under repo |
| 10 |
(1) | This section applies if— |
| |
(a) | there is a repo in respect of UK shares, |
| |
(b) | under the repo, the original owner has transferred the UK shares to the |
| |
| |
(c) | a qualifying distribution is made to the interim holder, |
| 15 |
(d) | the qualifying distribution is, or is a payment representative of, a |
| |
dividend in respect of the UK shares, and |
| |
(e) | a manufactured dividend representative of the dividend is paid by the |
| |
interim holder in respect of any UK shares in respect of which the repo |
| |
| 20 |
(2) | The interim holder is not entitled to a tax credit under section 397(1) of ITTOIA |
| |
2005 (tax credits for qualifying distributions) in respect of the distribution. |
| |
(3) | If the interim holder is UK resident, section 399(2) of ITTOIA 2005 (recipients |
| |
of qualifying distributions treated as having paid income tax at dividend |
| |
ordinary rate on them) does not apply in respect of the distribution. |
| 25 |
594 | No tax credits for original owner under repo |
| |
(1) | This section applies if— |
| |
(a) | there is a repo in respect of UK shares, |
| |
(b) | under the repo, the original owner has transferred the UK shares to the |
| |
| 30 |
(c) | a qualifying distribution is made, |
| |
(d) | the qualifying distribution is a manufactured dividend paid under the |
| |
repo in respect of the UK shares by the interim holder to the original |
| |
| |
(e) | the repo is not such that the actual dividend which the manufactured |
| 35 |
dividend represents is receivable by a person other than the original |
| |
| |
(2) | The original owner is not entitled to a tax credit under section 397(1) of ITTOIA |
| |
2005 (tax credits for qualifying distributions) in respect of the distribution. |
| |
(3) | If the original owner is UK resident, section 399(2) of ITTOIA 2005 (recipients |
| 40 |
of qualifying distributions treated as having paid income tax at dividend |
| |
ordinary rate on them) does not apply in respect of the distribution. |
| |
|
| |
|