The Income Tax (Manufactured Overseas Dividends) (Amendment No. 2) Regulations 2011

Insertion of new regulation 5B

5.  After regulation 5A insert—

“Chains of payments involving central counterparties

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

(a) a person pays a manufactured overseas dividend, and

(b) the payment is made as part of a chain of payments (“a CCP chain”), which may form part of a chain of payments to which regulation 5(2)(1) or 5A applies, where conditions A to C are met.

(2) Condition A is that each payment in the CCP chain is a payment of a manufactured overseas dividend representative of the same overseas dividend.

(3) Condition B is that each payment in the CCP chain is made—

(a) by or to a central counterparty,

(b) to a clearing member acting in the capacity as clearing member for another person where a corresponding payment is made by the clearing member to a central counterparty, or

(c) by a clearing member acting in the capacity as clearing member for another person where a corresponding payment is made to the clearing member by a central counterparty.

(4) Condition C is that a notice has been issued by or on behalf of the central counterparty to the first CCP payer and the final CCP recipient—

(a) confirming that conditions A and B are met, and

(b) either—

(i) stating names and registered addresses of the first CCP payer and the final CCP recipient, or

(ii) containing sufficient information to enable the parties to the CCP chain to meet their tax obligations in the United Kingdom with respect to the manufactured overseas dividend.

(5) For the purposes of Chapter 9 of Part 15 of the Income Tax Act 2007 and these Regulations—

(a) the first CCP payer is treated as required to pay to the final CCP recipient a manufactured overseas dividend representative of an overseas dividend on overseas securities paid under an arrangement for the transfer of securities,

(b) the payments in the CCP chain are disregarded, and

(c) a manufactured overseas dividend representative of the same overseas dividend is treated as paid by the first CCP payer to the final CCP recipient.

(6) In this regulation—

“central counterparty” means a recognised clearing house or recognised investment exchange which carries on a business of providing a central counterparty clearing service in relation to arrangements for the transfer of overseas securities;

“central counterparty clearing service” means the service provided to parties to an arrangement for the transfer of overseas securities, or to a clearing member acting on behalf of either of those parties, where there are contracts between each of those parties, or a clearing member, and the central counterparty in place of, or as an alternative to, a contract directly between those parties;

“clearing member” means a party who provides clearing arrangements between a party to an arrangement for the transfer of overseas securities and a central counterparty;

“final CCP recipient” means the party to whom the last payment in the CCP chain is made;

“first CCP payer” means the maker of the first payment in the CCP chain;

“recognised clearing house” has the meaning given by section 285 of the Financial Services and Markets Act 2000(2);

“recognised investment exchange” means—

(a)

a recognised investment exchange within the meaning of the Financial Services and Markets Act 2000 (see section 285),

(b)

a regulated market within the meaning of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments(3), or

(c)

a multilateral trading facility within the meaning of that Directive.”.

(1)

Regulation 5(2) was amended by S.I. 2011/1787.

(2)

2000 c. 8.

(3)

OJ L 145, 30.4.2004, p.1-44.