19Arrangements offering a choice of capital or income returnU.K.
(1)Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc from UK resident companies and tax credits etc in respect of certain distributions) is amended in accordance with subsections (2) to (6).
(2)After section 396 insert—
“Other amounts treated as distributionsU.K.
396AArrangements offering a choice of capital or income return
(1)Subsection (2) applies if a person (“S”) has a choice either—
(a)to receive what would (ignoring this section) be a distribution of a company, or
(b)to receive from that company, or from a third party, anything else (“the alternative receipt”) which—
(i)is of the same or substantially the same value, and
(ii)(ignoring this section) would not be charged to income tax.
(2)If S chooses the alternative receipt—
(a)for income tax purposes it is treated as a distribution made to S by that company in the tax year in which it is received by S, and
(b)for the purposes of the following provisions it is treated as a qualifying distribution so made—
(i)section 397 (tax credits for qualifying distributions of UK resident companies: UK residents and eligible non-UK residents);
(ii)section 399 (qualifying distributions received by persons not entitled to tax credits);
(iii)section 1100 of CTA 2010 (qualifying distributions: right to request a statement).
(3)For the purposes of this section—
(a)it does not matter if the choice mentioned in subsection (1) is subject to any conditions being met or to the exercise of any power;
(b)where S is offered one thing subject to a right, however expressed, to choose another instead, S is to be regarded as making a choice if S abandons or fails to exercise such a right.
(4)If at any time a tax other than income tax (“the other tax”) is charged in relation to the alternative receipt, in order to avoid a double charge to tax in respect of that receipt, a person may make a claim for one or more consequential adjustments to be made in respect of the other tax.
(5)On a claim under subsection (4) an officer of Revenue and Customs must make such of the consequential adjustments claimed (if any) as are just and reasonable.
(6)Consequential adjustments may be made—
(a)in respect of any period,
(b)by way of an assessment, the modification of an assessment, the amendment of a claim, or otherwise, and
(c)despite any time limit imposed by or under an enactment.”
(3)In section 382 (contents of Chapter 3), in subsection (1), omit the “and” at the end of paragraph (b) and after paragraph (c) insert “, and
(d)treats distributions as made in some circumstances (see section 396A).”
(4)In section 385 (person liable), in subsection (1)(a) for “and 389(3)” substitute “ , 389(3) and 396A ”.
(5)In section 397 (tax credits for qualifying distributions of UK resident companies: UK residents and eligible non-UK residents), after subsection (5) insert—
“(5A)This section needs to be read with section 396A(2) (which treats certain receipts as “qualifying distributions” for the purposes of this section).”
(6)In section 399 (qualifying distributions received by persons not entitled to tax credits), after subsection (5) insert—
“(5A)This section needs to be read with section 396A(2) (which treats certain receipts as “qualifying distributions” for the purposes of this section).”
(7)In section 481 of ITA 2007 (other amounts to be charged at special rates for trustees), in subsection (3), after “Type 1” insert “ or Type 12 ”.
(8)In section 482 of that Act (types of amount to be charged at special rates for trustees), at the end insert— “ Type 12 Income treated as arising to the trustees under section 396A of ITTOIA 2005 (arrangements offering a choice of income or capital return). ”
(9)In section 1100 of CTA 2010 (qualifying distributions: right to request a statement), after subsection (6) insert—
“(7)This section needs to be read with section 396A(2) of ITTOIA 2005 (which treats certain receipts as “qualifying distributions” for the purposes of this section).”
(10)The amendments made by subsections (2) to (4), (7) and (8) have effect in relation to things received on or after 6 April 2015 (even if the choice to receive them was made before that date).