Finance Act 2009

33 FSCS payments representing interest U.K.

(1) Chapter 2 of Part 4 of ITTOIA 2005 (interest) is amended as follows.

(2) In section 369(2) (list of provisions extending what is treated as interest for certain purposes), after “bonds),” insert— “ section 380A (FSCS payments representing interest), ”.

(3) After section 380 insert—

“380A FSCS payments representing interest

(1) Any payment representing interest which is made under the FSCS is treated as interest for the purposes of this Act.

(2) “Payment representing interest” means a payment calculated in the same way as interest which would have been paid to the recipient but for the circumstances giving rise to the making of payments under the FSCS.

(3) Where a payment representing interest is made net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest, the amount treated as interest by this section is the aggregate of the payment representing interest and that sum.

(4) This section applies to payments made under the FSCS whether or not they are made (in whole or in part) on behalf of the Treasury or any other person.

(5) In this section “the FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000).”

(4) In ITA 2007, after section 979 insert—

“979A FSCS payments representing interest

(1) This section applies where a payment is made under the FSCS representing interest net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest but for the circumstances giving rise to the making of payments under the FSCS.

(2) A payment of the relevant gross amount is treated as having been made under the FSCS after there has been deducted from it a sum representing income tax of that amount.

(3) That sum is accordingly taken into account under section 59B of TMA 1970 in determining the income tax payable by, or repayable to, the recipient.

(4) “The relevant gross amount” means the aggregate of the amount of the payment representing interest which is made and that sum.

(5) If the recipient requests it in writing, the scheme manager of the FSCS must provide the recipient with a statement showing—

(a) the relevant gross amount,

(b) the amount of the sum treated as deducted, and

(c) the amount of the payment representing interest.

(6) The duty to comply with a request under subsection (5) is enforceable by the recipient.

(7) In this section—

• “the FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000);

• “payment representing interest” has the same meaning as in section 380A of ITTOIA 2005.”

(5) The amendments made by this section have effect in relation to payments made on or after 6 October 2008.