The Income Tax (Manufactured Overseas Dividends) Regulations 1993

Offsetting of tax by overseas dividend manufacturers

9.—(1) In the circumstances prescribed by paragraph (2) and subject to paragraph (4), a person who is an overseas dividend manufacturer in any chargeable period shall be entitled to set off against each other–

(a) overseas tax in respect of overseas dividends, or amounts deducted under paragraph 4(2) of Schedule 23A from manufactured overseas dividends, received by him in that chargeable period, or amounts accounted for and paid under paragraph 4(3) of Schedule 23A or under regulation 4(3) in respect of manufactured overseas dividends received by him in that period, and

(b) sums due from him on account of the amounts deducted by him under paragraph 4(2) of Schedule 23A from the manufactured overseas dividends paid by him in that chargeable period.

(2) The circumstances prescribed by this paragraph are where–

(a) the overseas dividend manufacturer is an approved United Kingdom intermediary,

(b) the overseas dividends and manufactured overseas dividends referred to in paragraph (1)(a), if received by an overseas dividend manufacturer within sub– paragraph (a) of this paragraph who carries on a business in the ordinary course of which he receives overseas dividends and manufactured overseas dividends and pays manufactured overseas dividends, are such that a profit on the sale of the overseas securities to which those overseas dividends and manufactured overseas dividends relate would form part of the trading profits of that business,

(c) the manufactured overseas dividends paid are approved manufactured overseas dividends, and

(d) except in a case to which paragraph (3) applies, the overseas dividends or, as the case may be, the manufactured overseas dividends received by him, do not fall to be matched, in accordance with regulation 10(1), against manufactured overseas dividends paid by him in that period.

(3) This paragraph applies to a case where, under regulation 10(1), overseas dividends in respect of which overseas tax is payable received by the overseas dividend manufacturer in any chargeable period, and manufactured overseas dividends so received from which tax has been deducted or in respect of which tax falls to be accounted for and paid as mentioned in paragraph (1)(a) above, are matched against manufactured overseas dividends paid by him under deduction of tax in that period.

(4) Where paragraph (3) applies in respect of any chargeable period, the overseas dividend manufacturer shall be entitled to set off against each other–

(a) the tax attributable to the matched overseas dividends and manufactured overseas dividends received, and

(b) the tax attributable to the matched manufactured overseas dividends paid.

(5) Except in a case to which paragraph (3) applies, where in accordance with this regulation tax is set off by an overseas dividend manufacturer in any chargeable period and in relation to that period the sum of the overseas tax and amounts referred to in paragraph (1)(a) exceeds the total amount of the sums due as mentioned in paragraph (1)(b), relief under Part XVIII of the Taxes Act may be claimed by the overseas dividend manufacturer in respect of the amount of the excess.

(6) Where in accordance with this regulation tax is set off by an overseas dividend manufacturer in any chargeable period and in relation to that period the total amount of the sums due from the overseas dividend manufacturer as mentioned in paragraph (1)(b) exceeds the sum of the overseas tax and amounts referred to in paragraph (1)(a), the amount of the excess shall be payable to the Board.

(7) References to overseas tax in this regulation are references to the amount of such tax which is eligible for relief under Part XVIII of the Taxes Act either–

(a) pursuant to arrangements made with the government of the overseas territory specified in paragraph (8) which have effect by virtue of section 788 of the Taxes Act and relate to the overseas dividend concerned, or

(b) by virtue of other provisions of Part XVIII of the Taxes Act other than section 790(5)(c)(ii) of that Act.

(8) The overseas territory specified in this paragraph is the territory of the government or public or local authority which issued the securities in question or, where the securities were issued by any other body of persons not resident in the United Kingdom, the territory under whose law that tax would have been payable.