Income Tax Act 2007 (c. 3)

Part 15 U.K. Deduction of income tax at source

Modifications etc. (not altering text)

C1 Pt. 15 modified (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), ss. 551(4), 1329(1) (with Pts. 1, 2, Sch. 2 para. 78)

Chapter 9 U.K. Manufactured payments

Modifications etc. (not altering text)

C2 Pt. 15 Ch. 9 modified (with effect in accordance with art. 2 of the commencing S.I.) by Finance Act 2007 (c. 11), s. 47(4), Sch. 13 para. 13; S.I. 2007/2483, art. 2

Manufactured overseas dividends U.K.

922 Manufactured overseas dividends: payments by UK residents etc U.K.

(1) This section applies if a person who pays a manufactured overseas dividend as mentioned in section 581(1)—

(a) is UK resident, or

(b) pays the manufactured overseas dividend in the course of a trade carried on through a branch or agency in the United Kingdom.

[F1 (1A) But this section does not apply if—

(a) the manufactured overseas dividend is paid by a UK resident company in the course of a trade carried on through a permanent establishment in a territory outside the United Kingdom, and

(b) section 18A of CTA 2009 has effect in relation to the company for the accounting period in which it is paid.]

(2) The payer of the manufactured overseas dividend must, on making the payment, deduct from the gross amount of the manufactured overseas dividend a sum representing income tax equal to the relevant withholding tax on the gross amount.

(3) This section is subject (in particular) to—

• section 583 (manufactured payments exceeding underlying payments), and

• section 585 (manufactured payments: power to deal with special cases).

(4) Provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section may be included in regulations under section 586 or 925.

Textual Amendments

F1 S. 922(1A) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 23, 31

923 Foreign payers of manufactured overseas dividends: the reverse charge U.K.

(1) This section applies if a person who pays a manufactured overseas dividend as mentioned in section 581(1)—

(a) is non-UK resident, and

(b) pays the manufactured overseas dividend otherwise than in the course of a trade carried on through a branch or agency in the United Kingdom.

[F2 (1A) This section also applies if—

(a) a UK resident company pays a manufactured overseas dividend in the course of a trade carried on through a permanent establishment in a territory outside the United Kingdom, and

(b) section 18A of CTA 2009 has effect in relation to the company for the accounting period in which it is paid.]

(2) The recipient must account for and pay income tax in respect of the manufactured overseas dividend if the recipient—

(a) is UK resident, or

(b) is non-UK resident but receives the manufactured overseas dividend for the purposes of a trade carried on by the recipient through a branch or agency in the United Kingdom.

[F3 (2A) But this section does not apply if—

(a) the recipient is a UK resident company which receives the manufactured overseas dividend for the purposes of a trade carried on by the recipient through a permanent establishment in a territory outside the United Kingdom, and

(b) section 18A of CTA 2009 has effect in relation to the company for the accounting period in which it is received.]

(3) The amount of income tax to be accounted for and paid is equal to the amount of the sum representing income tax which the payer would have been required to deduct under section 922(2) if the payer had been UK resident [F4 and section 922(1A) did not apply].

(4) If the payer would not have been required to deduct any sum under section 922(2), the recipient is not required to account for and pay any income tax under this section.

(5) This section is subject to—

• section 583 (manufactured payments exceeding underlying payments),

• section 585 (manufactured payments: power to deal with special cases), and

• section 924 (power to reduce liability under this section).

(6) Provision about the collection of income tax required to be accounted for and paid under this section may be included in regulations under section 586.

Textual Amendments

F2 S. 923(1A) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 24(2), 31

F3 S. 923(2A) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 24(3), 31

F4 Words in s. 923(3) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 24(4), 31

924 Power to reduce section 923 liability U.K.

(1) The Treasury may by regulations provide for a reduction in the amount of tax to be accounted for and paid as a result of section 923.

(2) The reduction must be a reduction, to such extent and for such purposes as may be determined under the regulations, by reference to amounts of overseas tax charged on, or in respect of—

(a) the making of the manufactured overseas dividend, or

(b) the overseas dividend of which the manufactured overseas dividend is representative.

925 Power to provide set-off entitlement U.K.

(1) The Treasury may by regulations provide for a person who, in any prescribed period, pays a manufactured overseas dividend as mentioned in section 581(1) to be entitled—

(a) to set off relevant amounts of tax suffered against relevant tax liabilities, and

(b) to account to the Commissioners for Her Majesty's Revenue and Customs for the balance or claim credit in respect of it.

(2) Regulations under this section may—

(a) prescribe the circumstances in which relevant amounts of tax suffered may be set off against relevant tax liabilities, and

(b) provide for relevant amounts of tax suffered to be set off against relevant tax liabilities in accordance with the regulations and so far as prescribed.

(3) “Relevant amounts of tax suffered” are—

(a) amounts of overseas tax in respect of overseas dividends received by the person in the prescribed period,

(b) amounts of overseas tax charged on, or in respect of, the making of manufactured overseas dividends received by the person in the prescribed period, and

(c) amounts—

(i) deducted as a result of section 922, or

(ii) accounted for and paid as a result of section 923,

from any manufactured overseas dividends received by the person in the prescribed period.

(4) “Relevant tax liabilities” are sums due from the person on account of the amounts deducted by the person as a result of section 922 from the manufactured overseas dividends paid by the person in the prescribed period.

(5) In this section—

• “credit” includes credit against corporation tax, and

• “prescribed” means prescribed in regulations under this section.