SCHEDULE 16 Foreign income dividends
Part I The new Chapter
F11
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Part II Liability for and collection of advance corporation tax
2
In section 14 of the Taxes Act 1988 (advance corporation tax and qualifying distributions) in subsection (3) for the words “section 241” there shall be substituted “
sections 241 and 246F
”
.
3
(1)
Schedule 13 to the Taxes Act 1988 (collection of advance corporation tax) shall be amended as follows.
(2)
“(1)
A company shall for each of its accounting periods make, in accordance with this Schedule, returns to the collector of—
(a)
the franked payments made and franked investment income received by it in that period,
(b)
the foreign income dividends paid and foreign income dividends received by it in that period, and
(c)
the advance corporation tax (if any) payable by it in respect of the franked payments made and foreign income dividends paid by it in that period;
and references in this Schedule to foreign income dividends shall be construed in accordance with Chapter VA of this Part.”
(3)
“(4)
Subject to paragraphs 4(2), 4A(2) and 7(3) below, no return need be made under this Schedule by a company for any period in which it has—
(a)
made no franked payments, and
(b)
paid no foreign income dividends.”
(4)
“(1)
Subject to paragraphs 7(2), 3A(2) and 9A(2) below, the return made by a company for any return period shall show—
(a)
the amount of the franked payments, if any, made by it in that period,
(b)
the amount of franked investment income, if any, received by it in that period,
(c)
if any advance corporation tax is payable in respect of the franked payments, the amount thereof,
(d)
the amount of the foreign income dividends, if any, paid by it in that period,
(e)
the amount of the foreign income dividends, if any, received by it in that period, and
(f)
if any advance corporation tax is payable in respect of the foreign income dividends paid, the amount thereof.”
F2(5)
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F2(6)
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F2(7)
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F2(8)
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F2(9)
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F2(10)
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(11)
In paragraph 7 (qualifying distributions which are not payments and payments of uncertain nature) in sub-paragraph (3) for the words from “and if” to “that period” there shall be substituted “
and if in that period no franked payment (apart from that distribution or payment) is made and no foreign income dividend is paid
”
.
F2(12)
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(13)
This paragraph shall have effect in relation to any return period ending after 30th June 1994.
Part III Insurance companies etc.
F34
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5
(1)
Section 434 of the Taxes Act 1988 (franked investment income etc.) shall be amended as follows.
F4(2)
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F4(3)
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F5(4)
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F5(5)
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F66
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F77
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F88
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F99
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Part IV Other provisions
Penalties
10
In the first column of the Table in section 98 of the M1Taxes Management Act 1970 (penalties for failure to furnish particulars etc.) the following entry shall be inserted after the entry relating to section 234 of the principal Act— “
section 246H;
”
.
Small companies’ relief
F1011
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Expenses of management
F1112
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Group income
F1213
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Mutual business etc.
F1314
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Discretionary trusts
F1415
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Personal representatives
F1516
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Purchase and sale of securities
17
(1)
Section 731 of the Taxes Act 1988 (application and interpretation of provisions relating to purchase and sale of securities) shall be amended as follows.
(2)
In subsection (9), in the definition of “interest” the words from “and in applying” to the end of paragraph (b) shall be omitted.
(3)
“(9A)
In applying references in the relevant provisions to interest in relation to a qualifying distribution other than a foreign income dividend—
(a)
“gross interest” means the qualifying distribution together with the tax credit to which the recipient of the distribution is entitled in respect of it, and
(b)
“net interest” means the qualifying distribution exclusive of any such tax credit.
(9B)
In applying references in the relevant provisions to interest in relation to a foreign income dividend paid in circumstances where section 246D(1), (3) or (4) applies—
(a)
“gross interest” means the amount of the income arrived at under section 246D(1) by reference to the dividend, and
(b)
“net interest” means the dividend.
(9C)
Where a foreign income dividend is paid in circumstances other than those where section 246D(1), (3) or (4) applies—
(a)
in applying section 735(2) in relation to the dividend the words “the gross amount corresponding with” shall be disregarded, and
(b)
in applying references in the relevant provisions (including section 735(2)) to interest in relation to the dividend “net interest” means the dividend.
(9D)
In this section “foreign income dividend” shall be construed in accordance with Chapter VA of Part VI.”
Manufactured dividends
F1618
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F1719
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Interest on tax overpaid
20
(1)
Section 826 of the Taxes Act 1988 shall be amended as follows.
(2)
“(aa)
a repayment falls to be made under sections 246N and 246Q of advance corporation tax paid by a company in respect of distributions made by it in such an accounting period; or”.
(3)
“(2A)
In relation to advance corporation tax paid by a company in respect of distributions made by it in an accounting period, the material date for the purposes of this section is the date on which corporation tax for that accounting period became (or, as the case may be, would have become) due and payable in accordance with section 10.”