797Manufactured overseas dividends: amounts exceeding underlying paymentsU.K.
(1)This section applies if the sum of—
(a)an amount paid by way of manufactured overseas dividend, and
(b)the income tax required to be accounted for and paid in connection with the making of the payment,
would otherwise exceed the gross amount of the 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 Chapter 3 and this Chapter as not made under the requirement mentioned in section 790(b) (meaning of “manufactured overseas dividend”).
(3)Instead it is treated, to that extent, for all purposes of the Corporation Tax Acts as a separate fee for entering into the arrangement under which it was made.
(4)But subsection (3) does not apply so far as Part 5 of CTA 2009 (loan relationships) applies to the amount as if it were interest under a loan relationship as a result of section 540 of that Act.