Income Tax Act 2007 (c. 3)

Part 11 U.K. Manufactured payments and repos

Chapter 2 U.K. Manufactured payments

Manufactured overseas dividends U.K.

581 Manufactured overseas dividends U.K.

(1) This section applies if—

(a) a person (“the payer”) pays another person an amount (a “manufactured overseas dividend”) which is representative of an overseas dividend on overseas securities,

(b) the payer does so under a requirement of an arrangement between them for the transfer of the securities, and

(c) the condition in subsection (2) is met.

(2) The condition is that—

(a) in a case within section 922(1) (manufactured overseas dividends: payments by UK residents etc), the amount required to be deducted as a result of that section has been deducted, or

(b) in a case within section 923(1) (foreign payers of manufactured overseas dividends: the reverse charge), the amount of income tax required to be accounted for and paid as a result of that section has been accounted for and paid.

(3) Subsections (4) and (5) apply in relation to the recipient, and all persons claiming title through or under the recipient, for all relevant income tax purposes.

(4) The manufactured overseas dividend is treated as if it were—

(a) an overseas dividend of an amount equal to the gross amount of the manufactured overseas dividend, but

(b) paid after the withholding from it, on account of overseas tax, of the amount deducted as a result of section 922 or (as the case may be) accounted for and paid as a result of section 923.

(5) The amount deducted or accounted for and paid is accordingly to be treated as an amount withheld on account of overseas tax instead of as an amount on account of income tax.

(6) In this section “relevant income tax purposes” means the purposes of the Income Tax Acts as they apply in relation to—

(a) UK residents, and

(b) persons carrying on business through a branch or agency in the United Kingdom.

[F1 581A Avoidance arrangements U.K.

(1) A manufactured overseas dividend is not deductible if it (or any part of it) is made directly or indirectly in consequence of, or otherwise in connection with, avoidance arrangements.

(2) For the purposes of subsection (1) an amount is deductible if it is—

(a) deductible in calculating any of the payer's profits or gains for income tax purposes, or

(b) deductible for those purposes in calculating the net income of the payer.]

Textual Amendments

F1 S. 581A inserted (21.7.2008 with effect in accordance with s. 63(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 23 para. 9

582 Powers about manufactured overseas dividends U.K.

(1) The Treasury may by regulations make provision as mentioned in subsections (2) and (3) about prescribed cases where a person—

(a) pays or receives a manufactured overseas dividend as mentioned in section 581(1), or

(b) is treated as doing so for any purposes of this Chapter or regulations made under it.

(2) The regulations may provide for removing or reducing any right of the person to claim relief under [F2 Part 2 of TIOPA 2010] (double taxation relief).

(3) The regulations may provide for adjusting a relevant amount by reference to a provision which has effect under the law of a territory outside the United Kingdom.

(4) A “relevant amount” is an amount which is treated for prescribed income tax purposes as the amount paid or payable to a person in respect of a relevant transaction.

(5) A “relevant transaction” is a sale, repurchase or other transfer of the overseas securities to which the manufactured overseas dividend relates.

Textual Amendments

F2 Words in s. 582(2) substituted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 82 (with Sch. 9 paras. 1-9, 22)