Income and Corporation Taxes Act 1988

[F1 F2 2 (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.

(2) A manufactured dividend paid by a dividend manufacturer who is a company resident in the United Kingdom shall be treated for the purposes of the Tax Acts as if the amount paid were a dividend of the dividend manufacturer.

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

(a) an amount of tax representing the advance corporation tax that would have been payable in respect of the manufactured dividend if—

(i) the dividend manufacturer were a company resident in the United Kingdom, and

(ii) the manufactured dividend were a distribution by that company,

shall be accounted for to the extent, and in the manner, specified in dividend manufacturing regulations;

(b) the 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; and

(c) the Tax Acts shall have effect in relation to the dividend manufacturer subject to the provisions of paragraph 2A below.

(4) The persons who, under dividend manufacturing regulations, may be made liable to account for an amount of tax as mentioned in sub-paragraph (3)(a) above are—

(a) the dividend manufacturer, in the case of a manufactured dividend to which sub-paragraph (5) below applies; and

(b) the recipient, in the case of a manufactured dividend to which that sub-paragraph does not apply.

(5) This sub-paragraph applies to a manufactured dividend if—

(a) the dividend manufacturer is a person resident in the United Kingdom who is not a company; or

(b) the following two conditions are satisfied in the case of that manufactured dividend, that is to say—

(i) the dividend manufacturer is a company that is not so resident but carries on a trade in the United Kingdom through a branch or agency; and

(ii) the requirement to pay the manufactured dividend is attributable to the carrying on of a trade carried on through that branch or agency.

(6) F3 . . . where—

(a) a dividend manufacturer pays a manufactured dividend, and

(b) that dividend manufacturer is, in respect of that dividend, required under dividend manufacturing regulations to account for an amount of tax such as is mentioned in sub-paragraph (3)(a) above,

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, 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

F1 Sch. 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)

F2 Sch. 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)

F3 Words 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

Modifications etc. (not altering text)

C1 Sch. 23A para. 2(3)(c) extended (with effect in accordance with s. 24(15) of the extending Act) by Finance (No. 2) Act 1997 (c. 58), s. 24(13)