SCHEDULE 2Transitionals and savings
Part 15Deduction of income tax at source
Deduction from certain payments of yearly interest: interest paid on advances from banks
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(1)
In the case of payments of interest to which this paragraph applies, section 879 (exceptions from duty to deduct: interest paid on advances from banks) has effect with the modification in sub-paragraph (2).
(2)
The modification is the substitution for subsections (1) to (4) of that section of “The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest in the United Kingdom on an advance from a bank carrying on a genuine banking business in the United Kingdom.”
(3)
This paragraph applies to interest payable before 29 April 1996.
(4)
In the case of an institution which—
(a)
immediately before 29 April 1996 was not treated for the purposes of section 349(3)(a) of ICTA as a bank carrying on a genuine banking business in the United Kingdom, and
(b)
on that day fell within the definition of “bank” given by section 840A of ICTA,
this paragraph applies to interest payable on an advance made before that day.
(5)
In the case of an institution which—
(a)
immediately before 29 April 1996 was treated for the purposes of section 349(3)(a) of ICTA as a bank carrying on a genuine banking business in the United Kingdom, and
(b)
on that day did not fall within the definition of “bank” given by section 840A(1) of ICTA,
this paragraph applies to the interest mentioned in sub-paragraph (6).
(6)
That interest is any interest payable on an advance made before 29 April 1996, if at the time when the interest is paid the person beneficially entitled to the interest is within the charge to corporation tax as respects the interest.