Income and Corporation Taxes Act 1988 (c. 1)

SCHEDULES

Section 44(2).

SCHEDULE 3 U.K. MACHINERY FOR ASSESSMENT, CHARGE AND PAYMENT OF INCOME TAX UNDER SCHEDULE C AND, IN CERTAIN CASES, SCHEDULE D

PART I U.K. PUBLIC REVENUE DIVIDENDS ETC. PAYABLE TO THE BANK OF ENGLAND OR THE BANK OF IRELAND OR ENTRUSTED FOR PAYMENT TO THE BANK OF ENGLAND, THE BANK OF IRELAND OR THE NATIONAL DEBT COMMISSIONERS

1 M1 The Bank of England and the Bank of Ireland as respects the dividends and the profits attached thereto payable to them out of the public revenue of the United Kingdom, or payable out of any public revenue and entrusted to them for payment and distribution, and the National Debt Commissioners, as respects the dividends payable by them or of which they have the distribution, shall, when any payment becomes due, deliver to the Board true accounts, in books provided for the purpose, of—

(a) the amounts of the dividends and profits attached thereto payable to the Bank, and

(b) all dividends entrusted to the Bank or the National Debt Commissioners for payment to the persons entitled thereto, and

(c) the amount of income tax chargeable thereon at the [F1 lower] rate in force at the time of payment, without any other deduction than is allowed by the Income Tax Acts.

Textual Amendments

F1 Word in Sch. 3 para. 1(c) substituted (with effect in accordance with Sch. 6 para. 25(2) of the amending Act) by Finance Act 1996 (c. 8), s. 73(4), Sch. 6 para. 25(1)(a)

Modifications etc. (not altering text)

C1 See s.656 ante—purchased life annuities.

Marginal Citations

M1 Source—1970 Sch.5 1; 1971 Sch.6 80

2 (1) In the case of dividends and profits attached thereto payable to the Bank of England out of the public revenue of the United Kingdom, the Bank of England shall set apart the income tax in respect of the amount payable to them.

(2) M2 In the case of dividends and profits attached thereto entrusted to the Bank of England for payment and distribution, dividends payable by the Bank of Ireland at its principal office in Belfast, and dividends payable by the National Debt Commissioners or of which the National Debt Commissioners have the distribution—

(a) the Bank of England, the Bank of Ireland and the National Debt Commissioners respectively shall, before any payment is made by them, retain the amount of the income tax for the purposes of the Income Tax Acts, and

(b) the retaining of the amount shall be deemed to be a payment of the income tax by the persons entitled to the dividends, and shall be allowed by them on the receipt of the residue thereof, and

(c) the Bank of England, the Bank of Ireland and the National Debt Commissioners respectively shall be acquitted and discharged of a sum equal to the amount retained as though that sum had been actually paid.

(3) In relation to dividends payable to the Bank of Ireland out of the public revenue of the United Kingdom, and public revenue dividends which are entrusted to the Bank of Ireland for payment and distribution and are not payable by that Bank out of its principal office in Belfast, the following provisions shall have effect—

(a) the money which, apart from this sub-paragraph, would be issuable to the Bank of Ireland under section 14 of the M3 National Debt Act 1870, or otherwise payable to the Bank of Ireland for the purpose of dividends on securities of the United Kingdom government entered in the register of the Bank of Ireland in Dublin, shall be issued and paid to the Bank of England; and

(b) the Bank of England shall set apart and retain out of moneys so issued and paid to them the amount of the income tax on the dividends payable to the Bank of Ireland, and on the dividends on the securities of the United Kingdom government entered in the register of the Bank of Ireland in Dublin; and

(c) the Bank of England shall pay to the Bank of Ireland the residue of moneys so issued and paid to them, to be applied by the Bank of Ireland to the payment of the dividends; and

(d) the retaining of the amount shall be deemed to be a payment of the income tax by the persons entitled to the dividends, and shall be allowed by them on the receipt of the residue thereof, and the Bank of England and the Bank of Ireland shall be acquitted and discharged of a sum equal to the amount retained as though that sum had been actually paid.

Modifications etc. (not altering text)

C2 See s.821ante—under-deductions of tax from payments made before passing of annual Act.

Marginal Citations

M2 Source—1970 Sch.5 2-5

M3 1870 c. 71.

3 Money set apart or retained under paragraph 2 above, and the amount of any tax charged on the trading profits of the Bank of England or the Bank of Ireland, shall be paid into the general account of the Board at the Bank of England or the Bank of Ireland.

4 No deduction of income tax under this Part of this Schedule shall be made from any dividends payable in respect of stock, securities or annuities standing in the name of the official custodian for charities, nor from any dividends in respect of which there is given to the Bank of England a certificate from the Charity Commissioners that the dividends are subject only to charitable trusts and are exempt from tax.

PART II U.K. PUBLIC REVENUE DIVIDENDS PAYABLE BY PUBLIC OFFICES AND DEPARTMENTS

5 Where any payment is made of public revenue dividends payable by any public office or department of the Crown, the appropriate officer shall retain the income tax charged and pay the same into the general account of the Board at the Bank of England or the Bank of Ireland.

Modifications etc. (not altering text)

C3 See s.821ante—under-deductions of tax from payments made before passing of annual Act.

PART III U.K. OTHER PUBLIC REVENUE DIVIDENDS, FOREIGN DIVIDENDS AND PROCEEDS OF COUPONS

Modifications etc. (not altering text)

C4 Sch. 3 Pt. III applied (with modifications) (1.10.1993) by S.I. 1993/2004, reg. 12(2)(b)

Sch. 3 Pt. III applied (with modifications) (1.10.1993) by S.I. 1993/2004, reg. 13(2)(b)

6 (1) M4 The following persons are chargeable persons for the purposes of this Part of this Schedule—

(a) every person (other than the National Debt Commissioners or the Bank of England or the Bank of Ireland) who is entrusted with the payment of any dividends which are payable out of the public revenue of Northern Ireland, or which are payable to any persons in the United Kingdom out of any public revenue other than that of the United Kingdom or Northern Ireland;

(b) every person in the United Kingdom who is entrusted with the payment of any foreign dividends;

(c) every banker or other person in the United Kingdom who obtains payment of any dividends in such circumstances that the dividends are chargeable to tax under Schedule C, or in the case of foreign dividends, under Schedule D; and

(d) every banker in the United Kingdom who sells or otherwise realises coupons, and every dealer in coupons in the United Kingdom who purchases coupons, in such manner that the proceeds of the sale or realisation are chargeable to tax under Schedule C, or in the case of foreign dividends, under Schedule D.

F2 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2 Sch. 3 para. 6(2) repealed and superseded (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 2(2)(3), 6, Sch. 18 Pt. VII

Marginal Citations

M4 Source—1970 Sch.5 6(a)(b)

[F3 6A (1) On the fourteenth day following the month in which a transaction such as is mentioned in paragraph 6 above is effected, income tax (at the [F4 [F5 lower] rate] in force at the time of payment) shall become due in respect of the relevant dividends or proceeds.

(2) The tax shall be payable by the chargeable person on behalf of the persons entitled to the dividends or proceeds.

[F6 (2A) Payments of tax made on any person’s behalf under this paragraph shall be treated as made for the purpose only of being applied in the discharge of that person’s liability to tax charged (otherwise than by virtue of this paragraph) on the dividends or proceeds to which the payments relate.]

(3) The tax shall be payable without the making of any assessment.

[F7 (4) [F8 For the purposes of sub-paragraph (1) above the applicable rate shall be—

(a) the lower rate, in the case of a foreign dividend which is neither interest nor any other annual payment which is made otherwise than by way of dividend; and

(b) the basic rate in any other case.]]]

Textual Amendments

F3 Sch. 3 paras. 6A-6F inserted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(2), 6

F4 Words in Sch. 3 para. 6A(1) substituted (27.7.1993 with effect in relation to transactions effected on or after 6 April 1993) by 1993 c. 34, s. 79, Sch. 6 paras. 17(1), 25(5)

F5 Word in Sch. 3 para. 6A(1) substituted (with effect in accordance with Sch. 6 para. 25(2) of the amending Act) by Finance Act 1996 (c. 8), s. 73(4), Sch. 6 para. 25(1)(b)(i)

F6 Sch. 3 para. 6A(2A) inserted (27.7.1993 with effect in relation to transactions effected on or after 6 April 1993) by 1993 c. 34, s. 79, Sch. 6 paras. 17(2), 25(5)

F7 Sch. 3 para. 6A(4) inserted (27.7.1993 with effect in relation to transactions effected on or after 6 April 1993) by 1993 c. 34, s. 79, Sch. 6 paras. 17(3), 25(5)

F8 Sch. 3 para. 6A(4) ceases to have effect (with effect in accordance with Sch. 6 para. 25(2) of the amending Act) by virtue of Finance Act 1996 (c. 8), s. 73(4), Sch. 6 para. 25(1)(b)(ii)

F9 6B Any tax due under paragraph 6A above shall carry interest, at the rate applicable under section 178 of the Finance Act 1989, from the date on which it becomes due until it is paid.

Textual Amendments

F9 Sch. 3 paras. 6A-6F inserted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(2), 6

F10 6C (1) For each quarter in which a person effects a transaction in respect of which he is a chargeable person, he shall make a return to the Board.

(2) The return shall specify the chargeable person’s name and address and give, in respect of each such transaction effected by him in the quarter, correct and complete particulars of—

(a) the relevant dividends or proceeds, and

(b) the income tax on those dividends or proceeds for which he has accounted, or is accountable, under paragraph 6A above.

(3) The return shall be made within 30 days from the end of the quarter.

(4) In this paragraph and paragraphs 6D to 6F below, “quarter” means any period of three months ending with 31st March, 30th June, 30th September or 31st December.

Textual Amendments

F10 Sch. 3 paras. 6A-6F inserted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(2), 6

F11 6D (1) Any income tax which has become due under paragraph 6A above and particulars of which are included in a return may be assessed on the chargeable person (whether or not it has been paid when the assessment is made) if it, or any part of it, was not paid on or before the date on which it became due.

(2) If it appears to the Board that there are any dividends or proceeds particulars of which ought to have been and have not been included in a return, or if the Board are not satisfied with any return, the Board may make an assessment on the chargeable person of the amount, or further amount, of income tax for which he is in their opinion accountable.

(3) Where the Board make an assessment under sub-paragraph (2) above they shall specify—

(a) which of the months in the quarter was the one in which they consider the transactions in question were effected, or

(b) where they consider that the transactions were effected in more than one of the months in the quarter, the proportion of the total amount of the assessment that is to be attributed to each of those months.

(4) Any income tax assessed under sub-paragraph (2) above shall be due within 14 days after the issue of the notice of assessment; but for the purposes of paragraph 6B above—

(a) it shall be treated as having become due on the fourteenth day following the month specified under sub-paragraph (3)(a) above, or

(b) each of the portions of it specified under sub-paragraph (3)(b) above shall be treated as having become due on the fourteenth day following the month to which it is to be attributed.

Textual Amendments

F11 Sch. 3 paras. 6A-6F inserted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(2), 6

F12 6E (1) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) For the purposes of sections 34 and 36(1) of the Management Act (time limits for making assessments), an assessment under paragraph 6D above shall be taken to relate to the year of assessment in which the quarter to which the assessment relates ends.

(3) F13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F12 Sch. 3 paras. 6A-6F inserted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(2), 6

F13 Sch. 3 para. 6E(1)(3) repealed (with effect in accordance with s. 103(7) of the amending Act) by Finance Act 1995 (c. 4), ss. 115(11), 162, Sch. 29 Pt. 8(14), Note 2

F14 6F If a person has made a payment purporting to be a payment of tax due under paragraph 6A above but it appears to the Board that—

(a) he was not liable to make any payment under that paragraph, or

(b) the sum paid exceeded his liability under that paragraph,

the Board shall make or allow to be made such repayments, adjustments or set-offs against unpaid tax as they think appropriate.

Textual Amendments

F14 Sch. 3 paras. 6A-6F inserted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(2), 6

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

F15 7

Textual Amendments

F15 Sch. 3 para. 7 repealed and superseded (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 2(2)(3), 6, Sch. 18 Pt. VII

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

F16 8

Textual Amendments

F16 Sch. 3 para. 8 repealed and superseded (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 2(2)(3), 6, Sch. 18 Pt. VII

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

F17 9

Textual Amendments

F17 Sch. 3 para. 9 repealed and superseded (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 2(2)(3), 6, Sch. 18 Pt. VII

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

F18 10

Textual Amendments

F18 Sch. 3 para. 10 repealed (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 2(3), 6, Sch. 18 Pt. VII

11 M5 Nothing in [F19 paragraphs 6 to 6F] above shall impose on any banker the obligation to disclose any particulars relating to the affairs of any person on whose behalf he may be acting.

Textual Amendments

F19 Words in Sch. 3 para. 11 substituted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(4), 6

Marginal Citations

M5 Source—1970 Sch.5 11-13.

12 Where income tax in respect of the proceeds of the sale or realisation of any coupon has been accounted for under this Part of this Schedule by any banker or dealer, and the coupon has been subsequently paid in such manner that income tax has been deducted from the payment under any of the provisions of this Schedule, the tax so deducted shall be repaid.

A claim under this paragraph shall be made to the Board.

13 (1) F20 . . . ,the Board may, by notice served on any chargeable person, require that person within such time as may be specified in the notice to make available at his premises for inspection by an officer authorised by the Board all such books and other documents in the possession or control of that person as the officer may reasonably require for the purpose of determining whether any [F21 return made by that person under paragraph 6C above is] correct and complete.

(2) The Board may grant a certificate exempting any chargeable person from the provisions of sub-paragraph (1) above, and while the certificate is in force the powers conferred by that sub-paragraph shall not be exercisable in relation to that person; and any such certificate may be revoked at any time by the Board, and may contain such terms and conditions as they think proper.

Textual Amendments

F20 Words in Sch. 3 para. 13(1) repealed (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 2(5)(a), 6, Sch. 18 Pt. VII

F21 Words in Sch. 3 para. 13(1) substituted (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), s. 63, Sch. 11 paras. 2(5)(b), 6

14 M6 In this Part of this Schedule—

• “dividends” includes foreign dividends, and

• “foreign dividends” has the meaning given by section 123.

Marginal Citations

M6 Source—1970 Sch.5 6(c), 14

PART IV U.K. INTEREST PAYABLE OUT OF THE PUBLIC REVENUE OF THE REPUBLIC OF IRELAND ETC.

Modifications etc. (not altering text)

C5 Sch. 3 Pt. IV applied (with modifications) (1.10.1993) by S.I. 1993/2004, reg. 12(2)(b)

Sch. 3 Pt. IV applied (with modifications) (1.10.1993) by S.I. 1993/2004, reg. 13(2)(b)

15 (1) M7 Any person who is entrusted with the payment of any interest, dividends or other annual payments which are payable to any persons in the United Kingdom out of the public revenue of the Republic of Ireland, or out of or in respect of the stocks, funds, shares or securities of any Republic of Ireland company, society, adventure or concern, shall be relieved from the obligation imposed on him under the preceding provisions of this Schedule to pay income tax thereon on behalf of the persons entitled thereto as regards any such interest, dividends or other annual payments in respect of which he furnishes to the Board, in such form and subject to such conditions as they may prescribe, a list containing—

(a) a full description of the interest, dividends or other annual payments, and

(b) the name and address of each person who is entitled thereto, and

(c) the amount thereof to which each such person is entitled.

F22 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Any interest, dividends or other annual payments in respect of which the person entrusted with payment is relieved from the obligation to pay income tax by virtue of sub-paragraph (1) above, shall be assessable and chargeable under Case IV or V of Schedule D, as the case may be.

(4) The Board may make such regulations as may be necessary for the purposes of this paragraph.

(5) This paragraph shall apply to—

(a) any banker or other person in the United Kingdom who obtains payment of any such interest, dividends or other annual payments as is or are mentioned in sub-paragraph (1) above; and

(b) to any person who would, apart from this paragraph, be obliged to pay income tax in respect of the proceeds of the sale or other realisation of any coupon for any such interest, dividends or other annual payments,

as it applies to any person entrusted with the payment of any such interest, dividends or other annual payments, with the substitution in a case falling within paragraph (b) above, of references to the proceeds of the sale or other realisation for references to such interest, dividends or other annual payments.

In this sub-paragraph “coupon” has the same meaning as in section 123.

Textual Amendments

F22 Sch. 3 para. 15(2) repealed (16.7.1992 in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 2(3), 6, Sch. 18 Pt. VII

Marginal Citations

M7 Source—1970 Sch.12 Pt.III 6; 1987 Sch.15 2(23)