The Income Tax (Manufactured Overseas Dividends) (Amendment) Regulations 2007

Amendment of the Income Tax (Manufactured Overseas Dividends) Regulations 1993

4.  After regulation 5 insert—

“Chains of payments where last payment made to, or for benefit of, registered pension scheme or is linked solely to pension business

5A.— (1) This regulation applies where—

(a) a person (the “original payer”) pays a manufactured overseas dividend, and

(b) the payment is made to an approved United Kingdom intermediary or to an approved United Kingdom collecting agent as part of a chain of payments where conditions A to D are met.

(2) Condition A is that each payment in the chain, apart from the first, is a payment by an approved United Kingdom intermediary or an approved United Kingdom collecting agent of a manufactured overseas dividend representative of the same overseas dividend.

(3) Condition B is that the last payment in the chain—

(a) is made to, or for the benefit of, a registered pension scheme (within the meaning given in Part 4 of the Finance Act 2004), or

(b) is linked solely to pension business for the purposes of section 438 of the Taxes Act at the time that the payment is made.

(4) Condition C is that the last payment in the chain is made by a person who—

(a) is resident in the United Kingdom, or

(b) is not resident in the United Kingdom, but makes the payment in the course of a trade carried on through a permanent establishment.

(5) Condition D is that each recipient of payment in the chain has issued a notice to the original payer to make the payment at the applicable rate of relevant withholding tax.

(6) The applicable rate of relevant withholding tax for each payment in the chain shall be determined in accordance with paragraphs (7) and (8).

(7) If the last payment in the chain is made to, or for the benefit of, a registered pension scheme, the applicable rate shall be determined as if the person to whom the payment is made were the registered pension scheme to which the last payment in the chain is made.

(8) If the last payment in the chain is linked solely to pension business at the time that the payment is made, the applicable rate shall be determined as if the person to whom the payment is made were the person to whom the last payment in the chain is made.

(9) For the purposes of condition A (see paragraph (2)) it does not matter whether or not the first payment in the chain was made by an approved United Kingdom intermediary or an approved United Kingdom collecting agent.”.