(1)This section applies if—
(a)there is an issue of funding bonds to a creditor in respect of a liability to pay interest on a debt incurred by a government, public institution, other public authority or body corporate,
(b)by virtue of section 582(1)(a) of ICTA or section 380 of ITTOIA 2005, the issue is treated as if it were a payment of an amount of interest (“the deemed interest”), and
(c)the person by or through whom the bonds are issued is required, under this Part, to deduct a sum representing income tax from the deemed interest.
(2)The person by or through whom the bonds are issued must retain bonds the value of which is, at the time of their issue, equal to income tax on the deemed interest at the savings rate in force for the tax year in which the bonds are issued.
(3)A person who retains bonds in accordance with subsection (2) is treated as complying with the duty to deduct a sum representing income tax from the deemed interest.
(4)The person may tender the bonds retained in satisfaction of any income tax to be collected from the person in respect of the deemed interest under Chapter 15 or 16.
(5)But see section 940 for provision about circumstances where it is impracticable to retain bonds in accordance with subsection (2).
(6)In this Chapter “funding bonds” includes any bonds, stocks, shares, securities or certificates of indebtedness.
(1)This section applies if an issue of funding bonds is treated as a payment of interest (“the deemed interest”) as mentioned in section 939(1) and—
(a)the person by or through whom the bonds are issued is required to retain bonds under section 939(2), but
(b)it is impracticable for the person to do so.
(2)The duty to deduct a sum representing income tax from the deemed interest under this Part does not apply if the person tells the Commissioners for Her Majesty’s Revenue and Customs—
(a)the names and addresses of the persons to whom the bonds have been issued, and
(b)the amount of the bonds issued to each person.
(3)Accordingly—
(a)the duty to retain bonds under section 939(2) does not apply, and
(b)the provisions in Chapters 15 and 16 about the collection of income tax in respect of the deemed interest do not apply.