Corporation Tax Act 2010

Deemed manufactured payments U.K.

812 Deemed manufactured payments: stock lending arrangements U.K.

[F1 (1) This section applies if conditions A to C are met.

(1A) Condition A is that there is a stock lending arrangement in respect of securities.

(1B) Condition B is that a dividend or interest on the securities is paid, as a result of the arrangement, to a person other than the person who is the lender under the arrangement.

(1C) Condition C is that—

(a) no provision is made for securing that the lender receives payments representative of the dividend or interest, or

(b) provision is made for securing that the lender receives—

(i) payments representative of the dividend or interest, and

(ii) another benefit in respect of the dividend or interest (including the release of the whole or part of any liability to pay an amount).]

(2) The rules about manufactured payments apply for corporation tax purposes as if the person who is the borrower under the arrangement—

[F2 (a) were required, under the arrangement—

(i) in a case falling within paragraph (a) of subsection (1C), to pay the lender an amount representative of the dividend or interest, or

(ii) in a case falling within paragraph (b) of that subsection, to pay the lender an amount representative of the dividend or interest but deducting from that amount any payment mentioned in sub-paragraph (i) of that paragraph on which tax has been, or is to be, charged, and]

(b) discharged the requirement when the dividend or interest was paid.

(3) But the borrower is not entitled (whether as a result of the rules about manufactured payments or otherwise) to—

(a) a deduction in calculating profits or gains for corporation tax purposes, or

(b) a deduction from total profits,

in respect of the deemed requirement to pay or the deemed payment.

(4) In any case where section 792 (company receiving manufactured overseas dividend from UK resident etc) applies as a result of subsection (2), it has effect with the omission of—

(a) paragraph (b) of subsection (3) (and the “but” immediately before that paragraph), and

(b) subsection (4) (and the references to that subsection in subsections (2) and (5)).

(5) In any case where section 794 (company receiving manufactured overseas dividend from foreign payer) applies as a result of subsection (2), it has effect with the omission of—

(a) paragraph (b) of subsection (3) (and the “but” immediately before that paragraph), and

(b) subsection (4) (and the references to that subsection in subsections (2) and (5)).

[F3 (5A) Where section 792 or 794 has effect in accordance with subsection (4) or (5), nothing in the Tax Acts is to be read as having the effect that, in relation to the persons mentioned in section 792(2) or 794(2) for the purposes mentioned there, the amount that would otherwise have been treated as an amount withheld on account of overseas tax is to be regarded as an amount on account of income tax.]

(6) “The rules about manufactured payments” means—

(a) Chapters 2 to 4 and regulations made under Chapter 2 or 4,

(b) sections 808 to 810, and

(c) Chapter 9 of Part 6 of CTA 2009 (manufactured interest etc).

[F4 (7) This section has effect regardless of section 358 of CTA 2009 (exclusion of credits on release of connected companies debts) or any other provision of Part 5 of that Act (loan relationships) which prevents a credit from being brought into account.]

Textual Amendments

F1 S. 812(1)-(1C) substituted (with effect in accordance with s. 76(8) of the amending Act) for s. 812(1) by Finance Act 2013 (c. 29), s. 76(5)

F2 S. 812(2)(a) substituted (with effect in accordance with s. 76(8) of the amending Act) by Finance Act 2013 (c. 29), s. 76(6)

F3 S. 812(5A) inserted (with effect in accordance with s. 22(4) of the amending Act) by Finance Act 2012 (c. 14), s. 22(3)

F4 S. 812(7) inserted (with effect in accordance with s. 76(8) of the amending Act) by Finance Act 2013 (c. 29), s. 76(7)