Income Tax Act 2007 (c. 3)

Part 15 Deduction of income tax at source

Chapter 8 Chapters 6 and 7: special provision in relation to royalties

Discretion to make payments gross

914 EU companies: discretion to make payment gross

(1) This section applies if—

(a) a company makes a royalty payment and, at the time the payment is made, the company reasonably believes that the payment is exempt from income tax as a result of section 758 of ITTOIA 2005 (exemption for certain interest and royalty payments), but

(b) there is a duty to deduct a sum representing income tax from the payment under section 903(7) or 906 if the payment is not in fact exempt.

(2) The company may make the payment without deducting a sum representing income tax under section 903(7) or 906 (as the case may be).

(3) But if the payment is not in fact exempt from income tax as a result of section 758 of ITTOIA 2005, this Part has effect as if subsection (2) had never applied in relation to the payment.