Part 3

INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX
Chapter 2

OTHER PROVISIONS

Miscellaneous

Deduction of tax: payments between companies etc
85
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2
In section 98 of the Taxes Management Act 1970 (c. 9) (penalties for failing to make, or making incorrectly, certain returns etc.), after subsection (4) insert—
4A
If—
a
a failure to comply with section 350(1) of, or Schedule 16 to, the principal Act arises from a person’s failure to deliver an account, or show the amount, of a payment, and
b
the payment is within subsection (4B) below,
subsection (1) above shall have effect as if for “£300” there were substituted “£3,000” and as if for “£60” there were substituted “£600”.
4B
A payment is within this subsection if—
a
the payment is made by a company without an amount representing the income tax on the payment being deducted from the payment,
b
at the time the payment is made, the company—
i
does not believe that either of the conditions specified in section 349B of the principal Act is satisfied, or
ii
where it believes that either of those conditions is satisfied, could not reasonably so believe,
c
the payment is one from which tax is deductible under section 349 of the principal Act unless the company reasonably believes that one of those conditions is satisfied, and
d
neither of those conditions is satisfied at the time the payment is made.
4C
In subsection (4B) above “company” includes a partnership of which any member is a company.
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4
Subsections (1) to (3) apply to payments made on or after 1st April 2001.
5
Sections 247 and 248 of the Taxes Act 1988 (companies within a group may elect for section 349 not to apply to payments between them) shall cease to have effect.
6
Subsection (5) applies in relation to payments made after the day on which this Act is passed.
S. 85(3) repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)
S. 85(1) repealed (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 3 Pt. 1 (with Sch. 2)