|
| |
|
907 | Meaning of “relevant intellectual property right” |
| |
(1) | In section 906 “a relevant intellectual property right” means— |
| |
| |
(b) | a right in a design, or |
| |
(c) | the public lending right in respect of a book. |
| 5 |
| |
“copyright” does not include copyright in— |
| |
(a) | a cinematographic film or video recording, or |
| |
(b) | the sound-track of a cinematographic film or video recording, |
| |
except so far as it is separately exploited, |
| 10 |
“a right in a design” means the design right in a design, or the right in a |
| |
| |
908 | Royalty payments etc made through UK resident agents |
| |
| |
(a) | a payment to which section 906 applies is made through an agent who |
| 15 |
| |
(b) | the agent is entitled as against the owner of the right to deduct a sum as |
| |
commission for services provided, |
| |
| section 906(5) and Chapters 8 (deduction at special rates), 15 and 16 (collection) |
| |
apply as if the amount of the payment were the amount net of the sum |
| 20 |
deductible as commission. |
| |
(2) | But if the person by or through whom the payment is made does not know the |
| |
commission is payable, or does not know its amount— |
| |
(a) | the sum representing income tax required to be deducted under section |
| |
906 must be calculated in the first instance on the total amount of the |
| 25 |
| |
(b) | the return to be made under Chapter 15 or the account of the payment |
| |
under Chapter 16, must be based on that total amount. |
| |
909 | Royalty payments: further provision |
| |
(1) | A payment to which section 906 applies is treated for all income and |
| 30 |
corporation tax purposes as made when it is made by the first person who |
| |
makes it, not when it is made by or through any other person. |
| |
(2) | If, under section 906, a sum representing income tax must be deducted from a |
| |
payment, any agreement to make the payment without deduction of that sum |
| |
| 35 |
| |
(a) | applies to payments on account of royalties as it applies to payments of |
| |
| |
(b) | applies to payments on account of sums payable periodically as it |
| |
applies to payments of sums payable periodically. |
| 40 |
|
| |
|
| |
|
Proceeds of a sale of patent rights |
| |
910 | Proceeds of a sale of patent rights: payments to non-UK residents |
| |
(1) | This section applies if a non-UK resident sells the whole or part of any patent |
| |
rights and is chargeable in respect of the sale— |
| |
(a) | to income tax under section 587 of ITTOIA 2005, or |
| 5 |
(b) | to corporation tax under section 524(3) of ICTA. |
| |
(2) | The person by or through whom the proceeds of the sale are paid must, on |
| |
| |
| |
(b) | an instalment of the proceeds, |
| 10 |
| deduct from it a sum representing income tax on the chargeable amount at the |
| |
basic rate in force for the tax year in which the payment is made. |
| |
(3) | In subsection (2) “the chargeable amount” means— |
| |
(a) | so much of the proceeds or instalment as consists of a capital sum, less |
| |
(b) | any incidental expenses of the sale which are deducted before payment. |
| 15 |
(4) | Sections 597 to 599 of ITTOIA 2005 (licences connected with patents etc) apply |
| |
for the purposes of this section as they apply for the purposes of sections 587 |
| |
| |
(5) | Section 4 of CAA 2001 (meaning of “capital sums” etc) applies in relation to this |
| |
section as it applies in relation to that Act. |
| 20 |
(6) | For further provision about the sum required to be deducted, see— |
| |
(a) | section 595 of ITTOIA 2005 (certain rules affecting the seller’s income |
| |
tax position do not affect the amount to be deducted), and |
| |
(b) | section 524(9) of ICTA (certain rules affecting the seller’s corporation |
| |
tax position do not affect the amount to be deducted). |
| 25 |
(7) | See Chapter 11 (payments between companies etc) for an exception from the |
| |
duty to deduct sums representing income tax under this section. |
| |
(8) | For provision about the collection of income tax in respect of a payment from |
| |
which a sum must be deducted under this section— |
| |
(a) | see Chapter 15 if the person making the payment is a UK resident |
| 30 |
| |
(b) | otherwise see Chapter 16. |
| |
| |
Chapters 6 and 7: special provision in relation to royalties |
| |
Deduction at special rates |
| 35 |
911 | Double taxation arrangements: deduction at treaty rate |
| |
(1) | This section applies if— |
| |
(a) | a company pays a royalty from which it is required to deduct a sum |
| |
representing income tax under Chapter 6 or 7, |
| |
|
| |
|
| |
|
(b) | the income tax in respect of the payment is collectible under Chapter 15 |
| |
| |
(c) | the company reasonably believes that, at the time the payment is made, |
| |
the payee is entitled to relief in respect of the payment under double |
| |
| 5 |
(2) | The company may calculate the sum to be deducted from the payment under |
| |
Chapter 6 or 7 by reference to the treaty rate. |
| |
(3) | But, if the payee is not at the time entitled to such relief, this Part has effect as |
| |
if subsection (2) had never applied in relation to the payment. |
| |
(4) | In this section “the treaty rate” means the rate of income tax appropriate to the |
| 10 |
payee under the arrangements. |
| |
912 | Power to make directions disapplying section 911 |
| |
(1) | This section applies if an officer of Revenue and Customs is not satisfied that |
| |
the payee will be entitled to relief under double taxation arrangements in |
| |
respect of one or more payments of royalties that a company is to make. |
| 15 |
(2) | The officer may direct the company that section 911 is not to apply to the |
| |
| |
(3) | A direction under subsection (2) may be varied or revoked by a later direction. |
| |
913 | Interpretation of sections 911 and 912 |
| |
(1) | In sections 911 and 912 “royalty” includes— |
| 20 |
(a) | a payment received as consideration for the use of, or the right to use, |
| |
a copyright, patent, trade mark, design, process or information, and |
| |
(b) | the proceeds of the sale of the whole or part of any patent rights. |
| |
(2) | In sections 911 and 912 “payee” means the person beneficially entitled to the |
| |
income in respect of which the payment is made. |
| 25 |
Discretion to make payments gross |
| |
914 | EU companies: discretion to make payment gross |
| |
(1) | This section applies if— |
| |
(a) | a company makes a royalty payment and, at the time the payment is |
| |
made, the company reasonably believes that the payment is exempt |
| 30 |
from income tax as a result of section 758 of ITTOIA 2005 (exemption |
| |
for certain interest and royalty payments), but |
| |
(b) | there is a duty to deduct a sum representing income tax from the |
| |
payment under section 903(7) or 906 if the payment is not in fact |
| |
| 35 |
(2) | The company may make the payment without deducting a sum representing |
| |
income tax under section 903(7) or 906 (as the case may be). |
| |
(3) | But if the payment is not in fact exempt from income tax as a result of section |
| |
758 of ITTOIA 2005, this Part has effect as if subsection (2) had never applied |
| |
in relation to the payment. |
| 40 |
|
| |
|
| |
|
915 | Power to make directions disapplying section 914 |
| |
(1) | This section applies if an officer of Revenue and Customs is not satisfied that |
| |
one or more payments to be made by a company will be exempt from income |
| |
tax as a result of section 758 of ITTOIA 2005 (exemption for certain interest and |
| |
| 5 |
(2) | The officer may direct the company that section 914 is not to apply to the |
| |
| |
(3) | A direction under subsection (2) may be varied or revoked by a later direction. |
| |
916 | Duty of payee to notify if payment not exempt |
| |
(1) | This section applies if before a payment of a royalty is made, the company |
| 10 |
beneficially entitled to the income in respect of which the payment is to be |
| |
| |
(a) | believed that the payment was exempt from income tax as a result of |
| |
section 758 of ITTOIA 2005 (exemption for certain interest and royalty |
| |
| 15 |
(b) | has subsequently become aware that any of conditions A to C in that |
| |
section have ceased to be met. |
| |
(2) | The company must without delay notify— |
| |
(a) | an officer of Revenue and Customs, and |
| |
(b) | the company which is to make the payment. |
| 20 |
| |
(1) | If section 763 of ITTOIA 2005 (special relationships) applies, sections 914 to 916 |
| |
have effect in relation to only so much of the payment as does not exceed the |
| |
arm’s length amount (within the meaning of that section). |
| |
(2) | Expressions used in sections 914 to 916 and in sections 757 to 767 of ITTOIA |
| 25 |
2005 have the same meaning in sections 914 to 916 as in those sections. |
| |
| |
| |
| |
918 | Manufactured dividends on UK shares: Real Estate Investment Trusts |
| 30 |
(1) | This section applies if— |
| |
(a) | a person pays a manufactured dividend as mentioned in section 573(1), |
| |
| |
(b) | the manufactured dividend is representative of a dividend which is— |
| |
(i) | paid by a company to which Part 4 of FA 2006 applies (Real |
| 35 |
Estate Investment Trusts) in respect of profits of C (tax-exempt), |
| |
| |
(ii) | paid by the principal company of a group to which that Part |
| |
applies in respect of profits of G (property rental business). |
| |
|
| |
|
| |
|
(2) | This section applies only so far as the manufactured dividend is representative |
| |
| |
| |
| |
(b) | pays the manufactured dividend in the course of a trade carried on |
| 5 |
through a branch or agency in the United Kingdom, |
| |
| regulations under section 973 apply to the payer as they apply to a company to |
| |
which Part 4 of FA 2006 applies, with any necessary modifications. |
| |
(4) | The Treasury may by regulations provide, in a case where the payer— |
| |
(a) | is non-UK resident, and |
| 10 |
(b) | pays the manufactured dividend otherwise than in the course of a trade |
| |
carried on through a branch or agency in the United Kingdom, |
| |
| for a United Kingdom recipient of the manufactured dividend to be liable to |
| |
account for and pay income tax in respect of it. |
| |
(5) | A United Kingdom recipient is a recipient who— |
| 15 |
| |
(b) | is non-UK resident but receives the manufactured dividend for the |
| |
purposes of a trade carried on by the recipient through a branch or |
| |
agency in the United Kingdom. |
| |
(6) | The amount of income tax which the recipient may be liable to account for and |
| 20 |
pay under regulations under subsection (4) is equal to the amount of the sum |
| |
representing income tax which the payer would have been required to deduct |
| |
in accordance with regulations under section 973. |
| |
| |
(a) | regulations under section 973 as applied by subsection (3), and |
| 25 |
(b) | regulations under subsection (4), |
| |
| the “gross amount” of a manufactured dividend to which this section applies |
| |
is equal to the gross amount of the dividend of which it is representative. |
| |
| |
919 | Manufactured interest on UK securities: payments by UK residents etc |
| 30 |
(1) | This section applies if a person who pays manufactured interest as mentioned |
| |
| |
| |
(b) | pays the manufactured interest in the course of a trade carried on in the |
| |
United Kingdom through a branch or agency. |
| 35 |
(2) | The payer of the manufactured interest must, on making the payment, deduct |
| |
from the gross amount of the manufactured interest a sum representing |
| |
income tax on it at the savings rate in force for the tax year in which the |
| |
| |
(3) | The “gross amount” of manufactured interest is equal to the gross amount of |
| 40 |
the interest of which it is representative. |
| |
(4) | This section is subject (in particular) to— |
| |
section 583 (manufactured payments exceeding underlying payments), |
| |
section 585 (manufactured payments: power to deal with special cases), |
| |
|
| |
|
| |
|
section 921 (cases where interest on underlying securities paid gross), and |
| |
Chapter 11 (payments between companies etc: exception from duties to |
| |
| |
(5) | For provision about the collection of income tax in respect of a payment from |
| |
which a sum must be deducted under this section— |
| 5 |
(a) | see Chapter 15 if the payer of the manufactured interest is a company, |
| |
| |
(b) | otherwise see Chapter 16. |
| |
920 | Foreign payers of manufactured interest: the reverse charge |
| |
(1) | This section applies if a person who pays manufactured interest as mentioned |
| 10 |
| |
(a) | is non-UK resident, and |
| |
(b) | pays the manufactured interest otherwise than in the course of a trade |
| |
carried on in the United Kingdom through a branch or agency. |
| |
(2) | The recipient must account for and pay income tax in respect of the |
| 15 |
manufactured interest if the recipient— |
| |
| |
(b) | is non-UK resident but receives the manufactured interest for the |
| |
purposes of a trade carried on by the recipient in the United Kingdom |
| |
through a branch or agency. |
| 20 |
(3) | The amount of income tax to be accounted for and paid is equal to the amount |
| |
of the sum representing income tax which the payer would have been required |
| |
to deduct under section 919(2) if the payer had been UK resident. |
| |
(4) | If the payer would not have been required to deduct any sum under section |
| |
919(2), the recipient is not required to account for and pay any income tax |
| 25 |
| |
(5) | For examples of cases in which subsection (4) applies see (in particular)— |
| |
section 921 (cases where interest on underlying securities paid gross), and |
| |
Chapter 11 (payments between companies etc: exception from duties to |
| |
| 30 |
(6) | This section is subject to— |
| |
section 583 (manufactured payments exceeding underlying payments), |
| |
| |
section 585 (manufactured payments: power to deal with special cases). |
| |
(7) | Provision about the collection of income tax required to be accounted for and |
| 35 |
paid under this section may be included in regulations under section 586. |
| |
921 | Cases where interest on underlying securities paid gross |
| |
(1) | This section applies to manufactured interest which is representative of |
| |
| |
(a) | gilt-edged securities, or |
| 40 |
(b) | securities which are not gilt-edged securities but on which the interest |
| |
is payable without deduction of income tax. |
| |
|
| |
|
| |
|
(2) | Section 919(2) does not require any deduction of a sum representing income tax |
| |
to be made on the payment of the manufactured interest. |
| |
(3) | In this section “securities” includes loan stock or any similar security. |
| |
Manufactured overseas dividends |
| |
922 | Manufactured overseas dividends: payments by UK residents etc |
| 5 |
(1) | This section applies if a person who pays a manufactured overseas dividend as |
| |
mentioned in section 581(1)— |
| |
| |
(b) | pays the manufactured overseas dividend in the course of a trade |
| |
carried on through a branch or agency in the United Kingdom. |
| 10 |
(2) | The payer of the manufactured overseas dividend must, on making the |
| |
payment, deduct from the gross amount of the manufactured overseas |
| |
dividend a sum representing income tax equal to the relevant withholding tax |
| |
| |
(3) | This section is subject (in particular) to— |
| 15 |
section 583 (manufactured payments exceeding underlying payments), |
| |
| |
section 585 (manufactured payments: power to deal with special cases). |
| |
(4) | Provision about the collection of income tax in respect of a payment from |
| |
which a sum must be deducted under this section may be included in |
| 20 |
regulations under section 586 or 925. |
| |
923 | Foreign payers of manufactured overseas dividends: the reverse charge |
| |
(1) | This section applies if a person who pays a manufactured overseas dividend as |
| |
mentioned in section 581(1)— |
| |
(a) | is non-UK resident, and |
| 25 |
(b) | pays the manufactured overseas dividend otherwise than in the course |
| |
of a trade carried on through a branch or agency in the United |
| |
| |
(2) | The recipient must account for and pay income tax in respect of the |
| |
manufactured overseas dividend if the recipient— |
| 30 |
| |
(b) | is non-UK resident but receives the manufactured overseas dividend |
| |
for the purposes of a trade carried on by the recipient through a branch |
| |
or agency in the United Kingdom. |
| |
(3) | The amount of income tax to be accounted for and paid is equal to the amount |
| 35 |
of the sum representing income tax which the payer would have been required |
| |
to deduct under section 922(2) if the payer had been UK resident. |
| |
(4) | If the payer would not have been required to deduct any sum under section |
| |
922(2), the recipient is not required to account for and pay any income tax |
| |
| 40 |
(5) | This section is subject to— |
| |
section 583 (manufactured payments exceeding underlying payments), |
| |
|
| |
|