xmlns:atom="http://www.w3.org/2005/Atom" xmlns:atom="http://www.w3.org/2005/Atom"

SCHEDULES

Section 736A.]

[F1Schedule 23AU.K. MANUFACTURED DIVIDENDS AND INTEREST

Textual Amendments

F1Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para. 1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

Modifications etc. (not altering text)

InterpretationU.K.

F21(1)In this Schedule—

(2)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para. 1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F3Sch. 23A para. 1(1): definitions of "approved stock lending arrangement", "market maker", "recognised clearing house", "recognised investment exchange", "unapproved manufactured payment" and "unapproved stock lending arrangement" repealed (with effect in accordance with Sch. 18 Pt. 6(10), Notes 1, 2 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2

F4Sch. 23A para. 1(1): definition of "foreign income dividend" repealed (with effect in accordance with Sch. 6 para. 17(5) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 6 para. 17(2), Sch. 8 Pt. 2(11), Note

F5Sch. 23A para. 1(1): definition of "interest manufacturer" repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(2)(a), Sch. 3 Pt. 1 (with Sch. 2)

F6Sch. 23A para. 1(1): words in definition of "manufactured dividend", "manufactured interest" and "manufactured overseas dividend" repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(2)(b), Sch. 3 Pt. 1 (with Sch. 2)

F7Sch. 23A para. 1(1): definition of "manufactured interest" inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(2)(c) (with Sch. 2)

F8Sch. 23A para. 1(1): in the definition of "overseas securities", para. (b) and preceding word repealed (28.7.2000) by Finance Act 2000 (c. 17), Sch. 40 Pt. 2(17)

F9Sch. 23A para. 1(1): words in definition of "UK securities" repealed (28.7.2000) by Finance Act 2000 (c. 17), Sch. 40 Pt. 2(17)

F10Sch. 23A para 1(2) repealed (with effect in accordance with Sch. 18 Pt. 6(10) Note 2 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2

[F11 Manufactured dividends on UK equities: general]U.K.

Textual Amendments

F11Sch. 23A paras. 2-2B and cross-headings substituted for Sch. 23A para. 2 and cross-heading (with effect in accordance with Sch. 10 para. 16 of the amending Act) by Finance Act 1997 c. 16, Sch. 10 para. 10(1)

[F12F132(1)This paragraph applies in any case where, under a contract or other arrangements for the transfer of United Kingdom equities, one of the parties (a “dividend manufacturer”) is required to pay to the other (“the recipient”) an amount (a “manufactured dividend”) which is representative of a dividend on the equities.

[F14(2)Where a manufactured dividend is paid by a dividend manufacturer who is a company resident in the United Kingdom, the [F15Corporation] Tax Acts shall have effect—

(a)in relation to the recipient, and persons claiming title through or under him, as if the manufactured dividend were a dividend on the UK equities in question; and

(b)in relation to the dividend manufacturer, as if the amount paid were a dividend of his.]

(3)Where a manufactured dividend to which sub-paragraph (2) above does not apply is paid by any person—

(a)F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)the [F17Corporation] Tax Acts shall have effect in relation to the recipient, and persons claiming title through or under him, as if the manufactured dividend were a dividend on the United Kingdom equities in question; F18. . .

(c)F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F19(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F19(6)F20. . . Where—

(a)a dividend manufacturer pays a manufactured dividend F21. . . , F22. . . [F23, and

(aa)the dividend manufacturer is a non-UK resident company within the charge to corporation tax,]

F22(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the dividend manufacturer shall, on paying the manufactured dividend, provide the recipient with a statement in writing setting out the matters specified in sub-paragraph (7) below.

(7)Those matters are—

(a)the amount of the manufactured dividend;

(b)the date of the payment of the manufactured dividend; and

(c)the amount of the tax credit to which, by virtue of sub-paragraph (3)(b) above [F24or section 573(2) of ITA 2007], the recipient or a person claiming title through or under him either—

(i)is entitled in respect of the manufactured dividend, or

(ii)would be so entitled were all the conditions of a right to a tax credit satisfied, in the case of the recipient or that person, as respects the dividend which the recipient is deemed to receive.

(8)The duty imposed by sub-paragraph (6) above shall be enforceable at the suit or instance of the recipient.]

Textual Amendments

F12Sch. 23A paras 2-2B and cross-headings substituted for Sch. 23A para. 2 and cross-heading (with effect in accordance with Sch. 10 para. 16 of the amending Act) by Finance Act 1997 c. 16, Sch. 10 para. 10(1)

F13Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para. 1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg. 2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs. 2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs. 2, 3(b), 4)

F14Sch. 23A para. 2(2) substituted (with effect in accordance with s. 102(10) of the amending Act) by Finance Act 1998 (c. 36), s. 102(5)

F15Word in Sch. 23A para. 2(2) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(3)(a) (with Sch. 2)

F16Sch. 23A para. 2(3)(a) repealed (with effect in accordance with s. 102(10) of the repealing Act) by Finance Act 1998 (c. 36), s. 102(6), Sch. 27 Pt. 3(24), Note

F17Word in Sch. 23A para. 2(3)(b) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(3)(b) (with Sch. 2)

F18Sch. 23A para. 2(3)(c) and preceding word repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(3)(c), Sch. 3 Pt. 1 (with Sch. 2)

F19Sch. 23A para. 2(4)(5) repealed (with effect in accordance with s. 102(10) of the repealing Act) by Finance Act 1998 (c. 36), s. 102(8)(a), Sch. 27 Pt. 3(24), Note

F20Words in Sch. 23A para. 2(6) repealed (with effect in accordance with Sch. 6 para. 17(5) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 6 para. 17(3), Sch. 8 Pt. 2(11), Note

F21Words in Sch. 23A para. 2(6)(a) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(3)(d), Sch. 3 Pt. 1 (with Sch. 2)

F22Sch. 23A para. 2(6)(b) and preceding word repealed (with effect in accordance with s. 102(10) of the repealing Act) by Finance Act 1998 (c. 36), s. 102(8)(a), Sch. 27 Pt. 3(24), Note

F23Sch. 23A para. 2(6)(aa) and preceding word inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(3)(e) (with Sch. 2)

F24Words in Sch. 23A para. 2(7)(c) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(3)(f) (with Sch. 2)

Modifications etc. (not altering text)

Deductibility of manufactured payment in the case of the manufacturerU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

2AF25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F25Sch. 23A paras. 2A-3A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(4), Sch. 3 Pt. 1 (with Sch. 2)

Manufactured dividends representative of foreign income dividendsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

2BF26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F26Sch. 23A para. 2B repealed (with effect in accordance with Sch. 6 para. 17(5) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 6 para. 17(4), Sch. 8 Pt. 2(11), Note

Manufactured interest on UK securities: generalU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

3F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F27Sch. 23A paras. 2A-3A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(4), Sch. 3 Pt. 1 (with Sch. 2)

Manufactured interest on gilt-edged securities etc.U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

3AF28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F28Sch. 23A paras. 2A-3A repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(4), Sch. 3 Pt. 1 (with Sch. 2)

F29Manufactured overseas dividendsU.K.

Textual Amendments

F29Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para.1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F304(1)This paragraph applies in any case where, under a contract or other arrangements for the transfer of overseas securities, one of the parties (the “overseas dividend manufacturer”) is required to pay to the other (“the recipient”) an amount representative of an overseas dividend on the overseas securities; and in this Schedule the “manufactured overseas dividend” means any payment which the overseas dividend manufacturer makes in discharge of that requirement.

[F31(1A)Where a manufactured overseas dividend is paid as set out in sub-paragraph (1) above it shall be treated—

(a)as an expense of the trade where a company carries on a trade to which that payment relates;

(b)where a company has investment business to which the payment relates, for the purposes of section 75 as expenses of management;

(c)in the case of a company carrying on life assurance business—

(i)so far as the payment is referable to basic life assurance and general annuity business, for the purposes of section 76 as if it were an expense payable falling to be brought into account at Step 3 of subsection (7) of that section, and

(ii)the payment is to be treated as referable to basic life assurance and general annuity business to the extent that the overseas dividend of which it is representative is or would, if it were received by the company, be so referable by virtue of section 432A.]

(2)F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F33(2A)F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3)F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F34(3A)F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3B)F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(4)Where a manufactured overseas dividend is paid after deduction of the amount required by [F35section 922(2) of ITA 2007 (amount of income tax to be deducted at source)], or where the amount of tax required under [F36section 923 of that Act (income tax to be accounted for and paid)] in respect of such a dividend has been accounted for and paid, then for all purposes of the [F37Corporation Tax Acts]F38. . . —

(a)the manufactured overseas dividend shall be treated in relation to the recipient, and all [F39companies] claiming title through or under [F39the recipient], as if it were an overseas dividend of an amount equal to the gross amount of the manufactured overseas dividend, but paid after the withholding therefrom, on account of overseas tax, of the amount deducted [F39under section 922(2) of ITA 2007]; and

(b)the amount so deducted shall accordingly be treated in relation to the recipient, and all [F40companies] claiming title through or under [F40the recipient], as an amount so withheld instead of as an amount on account of income tax.

(5)For the purposes of this paragraph—

(a)F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)the gross amount of a manufactured overseas dividend is an amount equal to the gross amount of that overseas dividend of which the manufactured overseas dividend is representative, as mentioned in sub-paragraph (1) above; and

(c)the gross amount of an overseas dividend is an amount equal to the aggregate of—

(i)so much of the overseas dividend as remains after the deduction of the overseas tax (if any) chargeable on it;

(ii)the amount of the overseas tax (if any) so deducted; and

(iii)the amount of the overseas tax credit (if any) in respect of the overseas dividend.

(6)F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F44(7AA)F43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F45(7A)F46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(8)F47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F48(9)Without prejudice to section 97 of the Finance Act 1996 (manufactured interest), the references in this paragraph to all the purposes of the [F49Corporation] Tax Acts do not include the purposes of Chapter II of Part IV of that Act (loan relationships).]

Textual Amendments

F30Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para.1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F31Sch. 23A para. 4(1A) inserted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 37(3)

F32Sch. 23A para. 4(2)-(3B) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(a), Sch. 3 Pt. 1 (with Sch. 2)

F33Sch. 23A para. 4(2A) inserted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 37(5)

F34Sch. 23A para 4(3A)(3B) inserted (with effect in accordance with s. 159(9) of the amending Act) by Finance Act 1996 (c. 8), s. 159(5)

F35Words in Sch. 23A para. 4(4) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(b)(i) (with Sch. 2)

F36Words in Sch. 23A para. 4(4) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(b)(ii) (with Sch. 2)

F37Words in Sch. 23A para. 4(4) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(b)(iii) (with Sch. 2)

F38Words in Sch. 23A para. 4(4) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(b)(iv), Sch. 3 Pt. 1 (with Sch. 2)

F39Words in Sch. 23A para. 4(4)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(b)(v) (with Sch. 2)

F40Words in Sch. 23A para. 4(4)(b) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(b)(vi) (with Sch. 2)

F41Sch. 23A para. 4(5)(a) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(c), Sch. 3 Pt. 1 (with Sch. 2)

F42Sch. 23A para. 4(6) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(d), Sch. 3 Pt. 1 (with Sch. 2)

F43Sch. 23A para. 4(7)(7AA) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(e), Sch. 3 Pt. 1 (with Sch. 2)

F48Sch. 23A para. 4(9) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 52(4) (with Sch. 15)

F49Word in Sch. 23A para. 4(9) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(5)(f) (with Sch. 2)

Modifications etc. (not altering text)

C4Sch. 23A paras. 3, 4 modified (with effect in accordance with s. 153(4) of the modifying Act) by Finance Act 2003 (c. 14), s. 153(2)(a)

C5Sch. 23A para. 4(1) applied (1.10.1993) by S.I. 1993/2004, reg.2

Valid from 21/07/2009

4A(1)A reference in paragraph 4(4)(a) or (b) to the relevant amount in relation to an amount deducted under section 922(2) of ITA 2007 is—

(a)where the deduction is made in respect of a manufactured overseas dividend that is treated as paid under paragraph 13(1) of Schedule 13 to FA 2007 (sale and repurchase of securities), to amount A, and

(b)otherwise, to the amount deducted under section 922(2) of ITA 2007.

(2)Amount A is—

(a)in a case to which sub-paragraph (3) applies, the amount deducted under section 922(2) of ITA 2007,

(b)in a case to which sub-paragraph (4) applies—

(i)the amount deducted under section 922(2) of ITA 2007, less

(ii)the excess mentioned in that sub-paragraph, and

(c)in any other case, nil.

(3)This sub-paragraph applies to a case in which—

(a)an amount is actually paid by way of manufactured overseas dividend,

(b)the amount so paid equals the relevant net amount, and

(c)it is reasonable to assume that, in deciding the repurchase price of the securities, no account was taken of the fact that the amount would be so paid.

(4)This sub-paragraph applies to a case in which—

(a)an amount is actually paid by way of manufactured overseas dividend,

(b)the amount so paid exceeds the relevant net amount, and

(c)it is reasonable to assume that, in deciding the repurchase price of the securities, no account was taken of the fact that the amount would be so paid.

(5)In this paragraph “the repurchase price” of the securities means the price at which the payer of the manufactured overseas dividend is entitled or obliged to sell the securities, or similar securities, to the recipient of the manufactured overseas dividend.

(6)In this paragraph “the securities” means the securities in respect of which the overseas dividend of which the manufactured overseas dividend is representative is paid.

(7)In this paragraph “the relevant net amount” means—

(a)the gross amount of the overseas dividend of which the manufactured overseas dividend is representative, less

(b)the amount deducted under section 922(2) of ITA 2007.

F50Dividends and interest passing through the marketU.K.

Textual Amendments

F50Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para.1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs. 2, 3(b),4)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F515F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F51Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para. 1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F52Sch. 23A para. 5 repealed (with effect in accordance with Sch. 10 para. 16, Sch. 18 Pt. 6(10) Note 3 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 10 para. 12, Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2

F53Unapproved manufactured paymentsU.K.

Textual Amendments

F53Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para.1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F546F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F54Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para. 1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F55Sch. 23A para. 6 repealed (with effect in accordance with Sch. 10 para. 7(2), Sch. 18 Pt. 6(10) Note 2 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 10 para. 4(a), Sch 18 Pt. 6(10); S.I. 1997/991, art. 2

F56Irregular manufactured paymentsU.K.

Textual Amendments

F56Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para.1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F577(1)F58. . . In any case where (apart from this paragraph)—

(a)an amount paid by way of manufactured dividend would exceed the amount of the dividend of which it is representative, or

(b)the aggregate of—

(i)an amount paid by way of F59. . . manufactured overseas dividend, and

(ii)the tax required to be accounted for in connection with the making of that payment,

would exceed the gross amount (as determined in accordance with paragraph F60. . . 4 above) of the F61. . . overseas dividend of which it is representative F62. . . ,

the payment shall, to the extent of an amount equal to the excess, not be regarded for the purposes of this Schedule as made in discharge of the requirement referred to in paragraph 2(1)F63. . . or 4(1) above, as the case may be, but shall instead to that extent be taken for all purposes of the [F64Corporation Tax Acts] to constitute a separate fee for entering into the contract or other arrangements under which it was made, [F65notwithstanding anything in [F66paragraph 2] above or anything in paragraph 4 other than in sub-paragraph (1A).]

[F67(1A)Sub-paragraph (1) above does not apply in the case of the amount of any F68. . . manufactured overseas dividend which falls in accordance with section 97 of the Finance Act 1996 to be treated for the purposes of Chapter II of Part IV of that Act as interest under a loan relationship.]

(2)F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)For the purpose of giving relief under any provision of the [F70Corporation Tax Acts] in a case falling within paragraph F71. . . 4(1) above where (apart from this paragraph) the aggregate referred to in sub-paragraph (1)(b) above would be less than the gross amount there mentioned—

(a)the gross amount of the F72. . . manufactured overseas dividend shall be taken to be an amount equal to the aggregate referred to in sub-paragraph (1)(b) above, F73. . .

(b)F74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

notwithstanding anything in paragraph [F75F76. . . 4] above.

(4)In this paragraph “relief” means relief by way of—

(a)deduction in computing profits or gains; or

(b)deduction F77. . . against F77. . . total profits.

Textual Amendments

F57Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para.1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F58Words in Sch. 23A para. 7(1) repealed (with effect in accordance with Sch. 18 Pt. 6(10) Notes 3, 4(e) of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2

F59Words in Sch. 23A para. 7(1)(b)(i) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(a)(i), Sch. 3 Pt. 1 (with Sch. 2)

F60Words in Sch. 23A para. 7(1)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(a)(ii), Sch. 3 Pt. 1 (with Sch. 2)

F61Words in Sch. 23A para. 7(1)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(a)(iii), Sch. 3 Pt. 1 (with Sch. 2)

F62Words in Sch. 23A para. 7(1)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(a)(iv), Sch. 3 Pt. 1 (with Sch. 2)

F63Words in Sch. 23A para. 7(1) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(a)(v), Sch. 3 Pt. 1 (with Sch. 2)

F64Words in Sch. 23A para. 7(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(a)(vi) (with Sch. 2)

F65Words in Sch. 23A para. 7(1) substituted (28.9.2004 with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 37(7)

F66Words in Sch. 23A para. 7(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(a)(vii) (with Sch. 2)

F67Sch. 23A para. 7(1A) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 52(7) (with Sch. 15)

F68Words in Sch. 23A para. 7(1A) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(b), Sch. 3 Pt. 1 (with Sch. 2)

F69Sch. 23A para. 7(2) repealed (with effect in accordance with Sch. 18 Pt. 6(10) Note 3(b) of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2

F70Words in Sch. 23A para. 7(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(c)(i) (with Sch. 2)

F71Words in Sch. 23A para. 7(3) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(c)(ii), Sch. 3 Pt. 1 (with Sch. 2)

F72Words in Sch. 23A para. 7(3)(a) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(c)(iii), Sch. 3 Pt. 1 (with Sch. 2)

F73Words in Sch. 23A para. 7(3)(a) repealed (with effect in accordance with Sch. 10 para. 7(2), Sch. 18 Pt. 6(10) Note 2(c) of the repealing Act) by Finance Act 1997 (c. 16), Sch. 10 para. 4(b)(i), Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2

F74Sch. 23A para. 7(3)(b) repealed (with effect in accordance with Sch. 10 para. 7(2), Sch. 18 Pt. 6(10) Note 2(c) of the repealing Act) by Finance Act 1997 (c. 16), Sch. 10 para. 4(b)(ii), Sch. 18 Pt. 6(10); S.I. 1997/991, art. 2

F75Words in Sch. 23A para. 7(3) substituted (with effect in accordance with Sch. 10 para. 7(2) of the amending Act) by Finance Act 1997 (c. 16), Sch. 10 para. 4(b)(iii); S.I. 1997/991, art. 2

F76Words in Sch. 23A para. 7(3) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(c)(iv), Sch. 3 Pt. 1 (with Sch. 2)

F77Words in Sch. 23A para. 7(4)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(6)(d), Sch. 3 Pt. 1 (with Sch. 2)

Manufactured payments under arrangements having an unallowable purposeU.K.

7A(1)This paragraph applies in any case where—

(a)a manufactured payment falls to be made by a company in an accounting period in pursuance of any arrangements (see sub-paragraphs (9) and (10) for definitions), and

(b)the arrangements have an unallowable purpose at any time (see sub-paragraphs (3) to (5)).

But this is subject to sub-paragraph (8) below (cases where tax relief is denied apart from this paragraph).

(2)The company is not entitled, by virtue of anything in this Schedule or any provision of regulations under it, or otherwise, to any relevant tax relief (see sub-paragraph (10)), to the extent that the relief is in respect of, or referable to, the whole or any part of so much of the manufactured payment as, on a just and reasonable apportionment, is attributable to the unallowable purpose.

(3)Arrangements have an unallowable purpose at any time if at that time the purposes for which the company is a party to—

(a)the arrangements,

(b)any related transaction (see sub-paragraphs (6) and (7)), or

(c)any transaction in pursuance of the arrangements,

include a purpose (“the unallowable purpose”) which is not among the business or other commercial purposes of the company.

(4)The business and other commercial purposes of a company do not include the purposes of any part of its activities in respect of which it is not within the charge to corporation tax.

(5)Where one of the purposes for which a company is at any time a party to—

(a)any arrangements,

(b)any related transaction in the case of any arrangements, or

(c)any transaction in pursuance of any arrangements,

is a tax avoidance purpose, that purpose shall be taken to be a business or other commercial purpose of the company only where it is not the main purpose, or one of the main purposes, for which the company is party to the arrangements or transaction at that time.

(6)One or more transactions are to be regarded as related transactions, in the case of any arrangements, if it would be reasonable to assume, from either or both of—

(a)the likely effect of the transactions, and

(b)the circumstances in which the transactions are entered into or effected,

that none of the transactions would have been entered into or effected independently of the arrangements.

(7)Transactions are not prevented from being related transactions, in the case of any arrangements, just because the transactions—

(a)are not between the same parties, or

(b)are not between the parties to the arrangements.

(8)This paragraph does not apply if, as a result of any of the following provisions—

(a)section 75(4)(b) (expenses of management of companies with investment business: unallowable purposes),

(b)section 76(4)(d) (expenses of insurance companies: unallowable purposes),

(c)paragraph 13 of Schedule 9 to the Finance Act 1996 (loan relationships with unallowable purposes),

the company in question is not entitled to a relevant tax relief in respect of, or referable to, the whole or any part of the manufactured payment.

The references to sections 75 and 76 are references to those provisions as they have effect in relation to accounting periods beginning on or after 1st April 2004.

(9)Any reference in this paragraph to a manufactured payment falling to be made by a company includes a reference to a manufactured payment which is deemed by or under any provision of the Tax Acts to be made by a company (and references to a transaction, or to a company being party to a transaction, are to be construed accordingly).

(10)In this paragraph—

Textual Amendments

F78Sch. 23A para. 7A(10): in definition of "manufactured payment", para. (d) inserted (with effect in accordance with Sch. 5 para. 9(2)-(4) of the amending Act) by Finance Act 2007 (c. 11), Sch. 5 para. 9(1)

F79Sch. 23A para. 7A(10): definition of "tax advantage" substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(7) (with Sch. 2)

F80Dividend manufacturing regulations: generalU.K.

Textual Amendments

F80Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para.1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F818(1)Dividend manufacturing regulations may make provision for—

(a)such manufactured dividends F82. . . or manufactured overseas dividends as may be prescribed,

[F83(aa)such persons who receive, or become entitled to receive, manufactured dividends F82. . . or manufactured overseas dividends as may be prescribed,] or

(b)such dividend manufacturers F84. . . or overseas dividend manufacturers as may be prescribed,

to be treated in prescribed circumstances otherwise than as mentioned in [F85paragraphs [F862 and 4] above] for the purposes of such provisions of the [F87Corporation] Tax Acts as may be prescribed.

[F88(1A)Dividend manufacturing regulations may provide, in relation to prescribed cases where a person makes or receives the payment of any amount representative of an overseas dividend, or is treated for any purposes of this Schedule or such regulations as a person making or receiving such a payment—

(a)for any entitlement of that person to claim relief under Part XVIII to be extinguished or reduced to such extent as may be found under the regulations; and

(b)for the adjustment, by reference to any provision having effect under the law of a territory outside the United Kingdom, of any amount falling to be taken, for any prescribed purposes of the [F89Corporation] Tax Acts F90. . . , to be the amount paid or payable by or to any person in respect of any sale, repurchase or other transfer of the overseas securities to which the payment relates.]

(2)Dividend manufacturing regulations may make provision with respect to—

(a)the accounts and other records which are to be kept,

(b)the vouchers which are to be issued or produced,

(c)F91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)F91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F92by persons by F93. . . whom manufactured dividends F94. . . are paid.]

[F95(2A)F96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3)Dividend manufacturing regulations may—

(a)make provision for prescribed provisions of the Management Act to apply [F97for corporation tax purposes] in relation to manufactured dividends, manufactured interest or manufactured overseas dividends with such modifications, specified in the regulations, as the Treasury think fit;

(b)F98. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Dividend manufacturing regulations may make different provision for different cases.

Textual Amendments

F81Sch. 23A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 58, Sch. 13 para. 1 (with effect as mentioned in s. 58(3) in relation to payments made on or after such day as may be specified: 26.2.1992 specified for certain purposes by S.I. 1992/173, reg.2; 30.6.1992 specified for certain purposes by S.I. 1992/1346, regs.2, 3, 4; 21.4.1993 specified for certain purposes by S.I. 1993/933, regs.2, 3(b), 4)

F82Words in Sch. 23A para. 8(1)(a)(aa) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(a)(i), Sch. 3 Pt. 1 (with Sch. 2)

F84Words in Sch. 23A para. 8(1)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(a)(ii), Sch. 3 Pt. 1 (with Sch. 2)

F85Words in Sch. 23A para. 8(1) substituted (with effect in accordance with Sch. 10 para. 16 of the amending Act) by Finance Act 1997 (c. 16), Sch. 10 para. 13(1); S.I. 1997/991, art. 2

F86Words in Sch. 23A para. 8(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(a)(iii) (with Sch. 2)

F87Word in Sch. 23A para. 8(1) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(a)(iv) (with Sch. 2)

F89Word in Sch. 23A para. 8(1A)(b) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(b)(i) (with Sch. 2)

F90Words in Sch. 23A para. 8(1A)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(b)(ii), Sch. 3 Pt. 1 (with Sch. 2)

F91Sch. 23A para. 8(2)(c)(d) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(c)(i), Sch. 3 Pt. 1 (with Sch. 2)

F92Words in Sch 23A para. 8(2) substituted (with effect in accordance with Sch. 10 para. 16 of the amending Act) by Finance Act 1997 (c. 16), Sch. 10 para. 13(2); S.I. 1997/991, art. 2

F93Words in Sch. 23A para. 8(2) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(c)(ii), Sch. 3 Pt. 1 (with Sch. 2)

F94Words in Sch. 23A para. 8(2) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(c)(iii), Sch. 3 Pt. 1 (with Sch. 2)

F95Sch. 23A para. 8(2A) inserted (with effect in accordance with Sch. 10 para. 16 of the amending Act) by Finance Act 1997 (c. 16), Sch. 10 para. 13(3); S.I. 1997/991, art. 2

F96Sch. 23A para. 8(2A) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(d), Sch. 3 Pt. 1 (with Sch. 2)

F97Words in Sch. 23A para. 8(3)(a) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(e)(i) (with Sch. 2)

F98Sch. 23A para. 8(3)(b) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 238(8)(e)(ii), Sch. 3 Pt. 1 (with Sch. 2)