The Income Tax (Interest on Quoted Eurobonds) Regulations 1996

Explanatory Note

(This note is not part of the Regulations)

Subsection (1)(b) of section 124 of the Income and Corporation Taxes Act 1988 (“section 124”) provides that section 349(2) of that Act (deduction of tax on making a payment of any yearly interest of money chargeable to tax under Case III of Schedule D) shall not apply to a payment of interest on any quoted Eurobond made by or through a person who is in the United Kingdom if either of the conditions mentioned in subsection (2) of section 124 (“the relevant conditions”) is satisfied.

Subsection (2) of section 124 (substituted by paragraph 4 of Schedule 29 to the Finance Act 1996) stipulates that the relevant conditions are—

(a) that a person who is not resident in the United Kingdom and beneficially owns the quoted Eurobond, is beneficially entitled to the interest;

(b) that the quoted Eurobond is held in a recognised clearing system.

Subsection (3) of section 124 (substituted by paragraph 4 of Schedule 29 to the 1996 Act) provides that the Commissioners of Inland Revenue (“the Board”) may by regulations provide that subsection (1)(b) of section 124 shall be taken not to apply to a payment of interest unless the person by or through whom the payment is made (“the relevant payer”) has received a declaration confirming that one of the relevant conditions is satisfied, or the Board have issued a notice to the relevant payer stating that they consider that one or both of the relevant conditions is satisfied.

These Regulations make provision for such declarations and notices, and also provide for returns to be made and information to be furnished to the Board by relevant payers.

Regulation 1 provides for citation and commencement, and regulation 2 for interpretation.

Regulation 3 provides for a declaration to be made by a depositary for a recognised clearing system.

Regulation 4 provides for a declaration to be made by non-residents and other persons to whom, or at whose direction, interest on a quoted Eurobond is payable by the relevant payer.

Regulation 5 and 6 supplement the provisions of regulation 4 in connection with the terms of the declarations.

Regulation 7 provides for notices by the Board to the relevant payer directing that one or both of the relevant conditions is satisfied, or (as the case may be) that neither of the relevant conditions is satisfied.

Regulation 8 provides for quarterly returns to be made to the Board by a relevant payer, setting out details of payments of interest on quoted Eurobonds made by him in that quarter to which subsection (1)(b) of section 124 applied.

Regulation 9 provides for the furnishing of information to the Board by relevant payers, and regulation 10 for the inspection of records of relevant payers by an officer of the Board.

Regulation 11 provides for the keeping of records, and regulations 12 and 13 for the keeping and production of declarations, by relevant payers.