Office of Public Sector Information
PART 15 continued CHAPTER 9 continued
(1) The Treasury may by regulations provide for a reduction in the amount of tax to be accounted for and paid as a result of section 923.
(2) The reduction must be a reduction, to such extent and for such purposes as may be determined under the regulations, by reference to amounts of overseas tax charged on, or in respect of—
(a) the making of the manufactured overseas dividend, or
(b) the overseas dividend of which the manufactured overseas dividend is representative.
(1) The Treasury may by regulations provide for a person who, in any prescribed period, pays a manufactured overseas dividend as mentioned in section 581(1) to be entitled—
(a) to set off relevant amounts of tax suffered against relevant tax liabilities, and
(b) to account to the Commissioners for Her Majesty’s Revenue and Customs for the balance or claim credit in respect of it.
(2) Regulations under this section may—
(a) prescribe the circumstances in which relevant amounts of tax suffered may be set off against relevant tax liabilities, and
(b) provide for relevant amounts of tax suffered to be set off against relevant tax liabilities in accordance with the regulations and so far as prescribed.
(3) “Relevant amounts of tax suffered” are—
(a) amounts of overseas tax in respect of overseas dividends received by the person in the prescribed period,
(b) amounts of overseas tax charged on, or in respect of, the making of manufactured overseas dividends received by the person in the prescribed period, and
(c) amounts—
(i) deducted as a result of section 922, or
(ii) accounted for and paid as a result of section 923,
from any manufactured overseas dividends received by the person in the prescribed period.
(4) “Relevant tax liabilities” are sums due from the person on account of the amounts deducted by the person as a result of section 922 from the manufactured overseas dividends paid by the person in the prescribed period.
(5) In this section—
“credit” includes credit against corporation tax, and
“prescribed” means prescribed in regulations under this section.
(1) Expressions (except “prescribed”) used in this Chapter and in Chapter 2 of Part 11 (manufactured payments) have the same meaning in this Chapter as in that Chapter.
(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.
Regulations under this Chapter may make different provision for different cases.
(1) This section applies to any payment chargeable to tax under section 214(1) of ICTA (chargeable payments made within 5 years of an exempt distribution).
(2) The person by or through whom the payment is made must, on making the payment, deduct from it a sum representing income tax on it at the basic rate in force for the tax year in which it is made.
(3) See Chapter 11 (payments between companies etc) for an exception from the duty to deduct sums representing income tax under this section.
(4) 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 company, and
(b) otherwise see Chapter 16.
(5) In this section “payment” does not include a transfer of money’s worth that is treated as a payment for the purposes of section 214 of ICTA.
(1) This Chapter makes provision allowing some payments made by companies, local authorities and qualifying partnerships to be paid gross where they would otherwise be subject to specified duties to deduct sums representing income tax under this Part.
(2) Section 930 disapplies specified duties to deduct where a payment is made by a company, local authority or qualifying partnership which reasonably believes that the payment is an excepted payment.
(3) Section 931 confers power on an officer of Revenue and Customs to disapply section 930 by direction.
(4) Section 932 defines “qualifying partnership”.
(5) Sections 933 to 937 make provision as to when a payment is an excepted payment.
(6) Section 938 deals with what happens when a company, local authority or qualifying partnership makes a payment without deducting a sum representing income tax under a reasonable but incorrect belief that the payment is an excepted payment.
(1) The duties to deduct sums representing income tax mentioned in subsection (2) do not apply to a payment if—
(a) it is made by a company, local authority or qualifying partnership, and
(b) at the time the payment is made, the company, authority or partnership reasonably believes that it is an excepted payment.
(2) The duties to deduct are those under—
(a) section 874(2) (certain payments of yearly interest),
(b) section 889(4) (payments in respect of building society securities),
(c) section 901(4) (annual payments made by persons other than individuals),
(d) section 903(7) (patent royalties),
(e) section 906(5) (certain royalty payments etc where the owner lives abroad),
(f) section 910(2) (proceeds of a sale of patent rights paid to non-UK residents),
(g) section 919(2) (manufactured interest on UK securities: payments by UK residents etc), and
(h) section 928(2) (chargeable payments connected with exempt distributions).
(3) Subsection (1) has effect subject to any directions under section 931.
(4) Subsection (1) does not apply to a payment made by a company, or qualifying partnership, acting as trustee or agent for another person.
(1) An officer of Revenue and Customs may give a direction to a company, local authority or qualifying partnership directing that section 930 is not to apply in relation to any payment that—
(a) is made by the company, authority or partnership after the giving of the direction, and
(b) is specified in the direction or is of a description so specified.
(2) A direction under this section may be given only if the officer has reasonable grounds for believing, as respects each payment to which the direction relates, that the payment will not be an excepted payment at the time it is made.
(3) A direction under this section may be varied or revoked by a later direction.
(4) A variation or revocation of a direction under this section has effect only in relation to payments made after the date of the variation or revocation.
For the purposes of this Chapter a partnership is a “qualifying partnership” if any partner in the partnership is a company or a local authority.
A payment is an excepted payment if the person beneficially entitled to the income in respect of which the payment is made is a UK resident company.
(1) A payment is an excepted payment if each of the following conditions is met in relation to the payment.
(2) The person beneficially entitled to the income in respect of which the payment is made must be a non-UK resident company.
(3) The non-UK resident company must carry on a trade in the United Kingdom through a permanent establishment.
(4) The payment must be one that is required to be brought into account in calculating the chargeable profits (within the meaning given by section 11(2) of ICTA) of the non-UK resident company.
(1) A payment is an excepted payment if each of the following conditions is met in relation to the payment.
(2) The person to whom the payment is made must be, or must be the nominee of, the plan manager of a plan of a kind to which regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) apply.
(3) The plan manager must receive the payment in respect of investments under the plan.
(1) A payment is an excepted payment if it is made to, or to the nominee of, a recipient who is specified in subsection (2) as a recipient who is to be paid gross.
(2) The following recipients are to be paid gross—
(a) a local authority,
(b) a health service body within the meaning of section 519A(2) of ICTA,
(c) a public office or department of the Crown other than one mentioned in section 978(2),
(d) a charity,
(e) a body for the time being mentioned in section 507(1) of ICTA (bodies that are allowed the same exemption from tax as charitable companies the whole income of which is applied to charitable purposes),
(f) an Association which complies with the conditions in section 508(1) of ICTA (scientific research organisations),
(g) the scheme administrator of a registered pension scheme,
(h) the sub-scheme administrator of a sub-scheme which forms part of a split scheme pursuant to the Registered Pensions (Splitting of Schemes) Regulations 2006 (S.I. 2006/569),
(i) the trustees of a scheme entitled to exemption under section 613(4) of ICTA (Parliamentary pension funds), and
(j) the persons entitled to receive the income of a fund entitled to exemption under section 614(3) of ICTA (certain colonial, etc pension funds).
(3) The Treasury may by order amend this section so as to add to, restrict or otherwise alter the persons or bodies who are to be paid gross.
(1) A payment is an excepted payment if each of the following conditions are met.
(2) A partnership must be beneficially entitled to the income in respect of which the payment is made.
(3) Each partner in the partnership must be—
(a) a person or body mentioned in section 936, 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—
(a) is non-UK resident,
(b) carries on a trade in the United Kingdom through a permanent establishment, and
(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 the payment that is attributable to it because of sections 114 and 115 of ICTA.
(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).
(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 being deducted from it,
(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 930(2) would apply to the payment if the company did not so believe, and
(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 930(1) had never disapplied the duties to deduct mentioned in section 930(2).
(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, 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 deemed interest”), and
(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 interest.
(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 interest at the savings rate in force for the tax year in which the bonds are issued.
(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 deemed interest.
(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 15 or 16.
(5) But see section 940 for provision about circumstances where it is impracticable to retain bonds in accordance with subsection (2).
(6) In this Chapter “funding bonds” includes any bonds, stocks, shares, securities or certificates of indebtedness.
(1) This section applies if an issue of funding bonds is treated as a payment of interest (“the deemed interest”) as mentioned in section 939(1) and—
(a) the person by or through whom the bonds are issued is required to retain bonds under section 939(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 Majesty’s Revenue and Customs—
(a) the names and addresses of the persons to whom the bonds have been issued, and
(b) the amount of the bonds issued to each person.
(3) Accordingly—
(a) the duty to retain bonds under section 939(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.
(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 income on a date.
(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 2005).
(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 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 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.
(6) In this Chapter—
“deemed deduction” means a deduction within subsection (3) or (5),
“deemed payment” means a payment within subsection (2) or (4), and
“the gross amount” means, in relation to a deemed payment, the amount of the payment before the deemed deduction is made from it.
(1) This section applies if in a tax year the trustees of an unauthorised unit trust are treated as making deemed payments.
(2) Income tax is to be collected through trustees' self-assessment returns 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 payments.
(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 1025), the collectable amount is the amount calculated by taking the steps in subsection (5).
(5) The steps to be taken are as follows.
Step 1
Take the amount equal to the sum of the gross amounts of the deemed payments and reduce that amount by—
the amount of the trustees' income pool as at the start of the tax year (see section 943), or
if less, the amount by which the sum of the gross amounts of the deemed payments exceeds the trustees' modified net income.
Step 2
Apply the basic rate for the tax year to the result from Step 1.
(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).
Case 1
This case applies if 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.
The trustees' income pool as at the start of the current tax year is the sum of—
the amount of the trustees' income pool as at the start of the previous tax year, and
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.
Case 2
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—
the amount of the trustees' income pool as at the start of the previous tax year, less
the amount of the reduction made at Step 1 in section 942(5) for the purpose of calculating the collectable amount for the previous tax year.
Case 3
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.
(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 trust is established, or
(b) the trustees have been UK resident for no tax year prior to the current tax year.
(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 13 (tax avoidance: transactions in land), or
(b) Chapter 4 of that Part (tax avoidance: sales of occupation income),
is non-UK resident.
(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.
(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 768(4) or 786(4) (recovery of tax where consideration receivable by person not assessed).
(4) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under subsection (2)—
(a) see Chapter 15 if the person making the payment is a UK resident company, and
(b) otherwise see Chapter 16.
(1) This Chapter provides—
(a) for persons who have made payments within section 946 (“section 946 payments”) to make returns of the payments, and
(b) for the collection of income tax in respect of those payments.
(2) Sections 947 and 948 contain definitions and other provisions in relation to the following basic concepts used in the Chapter: “return period” and “accounting period”.
(3) Section 949 requires persons who have made section 946 payments to deliver returns of those payments made in return periods falling within accounting periods, and section 950 requires such persons to deliver returns of those payments made otherwise than in accounting periods.
(4) Section 951 explains—
(a) how much income tax is due from persons in respect of section 946 payments made by them, and
(b) when that income tax must be paid.
(5) Sections 952 to 955 allow persons who have made section 946 payments to make claims for income tax they have suffered to be set off against income tax payable by them in respect of the payments.
(6) Sections 956 to 960 explain what happens in cases where income tax payable in respect of section 946 payments is not paid when it is due, or where returns are incomplete or incorrect.
(7) Sections 961 and 962 contain supplementary provisions.
(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)).
The payments within this section are—
(a) a payment from which a deposit-taker or building society is required to deduct a sum representing income tax under section 851,
(b) a payment from which a UK resident company is required to deduct a sum representing income tax under—
(i) section 874(2) (payments of yearly interest),
(ii) section 889(4) (payments in respect of building society securities),
(iii) section 892(2) (certain payments of UK public revenue dividends),
(iv) section 901(4) (annual payments made by persons other than individuals),
(v) section 903(7) (patent royalties),
(vi) section 906(5) (royalty payments etc where the owner lives abroad),
(vii) section 910(2) (proceeds of a sale of patent rights paid to non-UK residents),
(viii) section 928(2) (chargeable payments connected with exempt distributions), or
(ix) section 944(2) (directions for deduction from payments to non-UK residents), and
(c) a payment from which a company is required to deduct a sum representing income tax under section 919(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 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 which—
(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 period.
(3) If no quarter date falls within the accounting period, the accounting period itself is to be treated as a return period which falls within the accounting period.
(4) In this section—
“quarter” means a period of three months ending—
unless paragraph (b) applies, with the last day of March, June, September or December, or
if the person mentioned in subsection (1) is a building society, with the last day of February, May, August or November, and
“quarter date” means—
unless paragraph (b) applies, the last day of March, June, September or December, or
if the person mentioned in subsection (1) is a building society, the last day of February, May, August or November.
(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.
“Deposit-taker” has the same meaning as in Chapter 2 (see section 853).
(2) See section 12 of ICTA (basis of, and periods for, assessment) for provision about accounting periods of companies.
(1) This section applies if a person makes a section 946 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 return period—
(a) which falls within the accounting period, and
(b) in which the person makes a section 946 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 946 payments made by the person in the return period, and
(b) the income tax payable by the person in respect of those payments (see section 951).
Income Tax Act 2007