Schedule 23A
Manufactured dividends on UK equities: general
F1F22
(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.
F3(1A)
Sub-paragraphs (1C) to (1E) apply where—
(a)
a manufactured dividend is paid by a dividend manufacturer, and
(b)
the dividend of which the manufactured dividend is representative is taxable.
(1B)
For this purpose a dividend is “taxable” if—
(a)
it is received by the dividend manufacturer and the charge to corporation tax on income applies to it, or
(b)
it is received by a person other than the dividend manufacturer and the charge to corporation tax on income would have applied to it if it had been received by the dividend manufacturer.
(1C)
Where the dividend manufacturer carries on a trade to which the manufactured dividend relates, and neither sub-paragraph (1D) nor (1E) applies, the manufactured dividend is to be treated as an expense of the trade.
(1D)
Where the dividend manufacturer has investment business to which the manufactured dividend relates, the manufactured dividend is to be treated as expenses of management of the business for the purposes of Part 16 of CTA 2009.
(1E)
Where the dividend manufacturer carries on life assurance business to which the manufactured dividend relates, the manufactured dividend is to be treated as if, to the extent that it is referable to basic life assurance and general annuity business, it were an expense payable falling to be brought into account at step 3 of section 76(7).
(1F)
For the purposes of sub-paragraph (1E), the manufactured dividend is to be treated as referable to basic life assurance and general annuity business to the extent that the dividend of which it is representative—
(a)
is received by the dividend manufacturer and is so referable by virtue of section 432A, or
(b)
is received by a person other than the dividend manufacturer, and would have been so referable by virtue of section 432A if it had it been received by the dividend manufacturer.
F4(2)
Where a manufactured dividend is paid by a dividend manufacturer who is a company resident in the United Kingdom, the F5Corporation 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; F6. . .
(b)
F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)
Where a manufactured dividend to which sub-paragraph (2) above does not apply is paid by any person—
(a)
F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)
(c)
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F10(3A)
In its application in relation to a manufactured dividend by virtue of sub-paragraph (2) or (3), Part 9A of CTA 2009 (company distributions) has effect subject to the following modification.
(3B)
The modification is that—
(a)
the definition of “the payer” in section 931T is to be treated as omitted, and
(b)
references in that Part to the payer are to be treated as references to the company that pays the dividend of which the manufactured dividend is representative.
(4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F11(6)
F12. . . Where—
(aa)
the dividend manufacturer is a non-UK resident company within the charge to corporation tax,
F14(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 F16or 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.