These Regulations amend the Double Taxation Relief (Taxes on Income) (General) Regulations 1970 (S.I.1970/488) (“the principal Regulations”).
The principal Regulations make provision governing the way in which relief from United Kingdom tax due on certain payments of interest or royalties to non-residents by virtue of a double taxation agreement may be given at source.
Regulation 2 of the principal Regulations provides for a notice to be given by or on behalf of the Board of Inland Revenue to the maker of the payment directing him not to deduct tax on making the payment, or to deduct tax at the rate specified in the notice and not at the standard rate otherwise appropriate.
Regulation 3 of the principal Regulations provides that, where a notice is issued under regulation 2 directing the payer to deduct tax at a rate other than the standard rate, the provisions of the Income Tax Acts under which the payer would, but for the notice, have been liable to account for all or any part of the tax deducted at the standard rate shall apply as if those Acts had required deduction of tax at the rate specified in the notice. Regulation 4 of the principal Regulations provides that where, but for a notice under regulation 2, the payer would have been entitled to retain income tax deductible on making the payment, an allowance equal to the amount of tax he would have been entitled to retain shall be made to him against income tax otherwise payable by him for the year concerned.
For the year 1973-74 and subsequent years of assessment references in the principal Regulations to the standard rate of income tax have effect as if they were references to the basic rate.
These Regulations substitute with effect from 6th April 1996 references to the lower or basic rate of income tax for references in regulations 2 to 4 of the principal Regulations to the standard rate.