C2Part 15Deduction of income tax at source
C1Chapter 9Manufactured payments
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 interest
920Foreign payers of manufactured interest: the reverse charge
1
This section applies if a person who pays manufactured interest as mentioned in section 578(1)—
a
is non-UK resident, and
b
pays the manufactured interest otherwise than in the course of a trade carried on in the United Kingdom through a branch or agency.
F11A
This section also applies if—
a
a UK resident company pays manufactured interest 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 interest if the recipient—
a
is UK resident, or
b
is non-UK resident but receives the manufactured interest for the purposes of a trade carried on by the recipient in the United Kingdom through a branch or agency.
F22A
But this section does not apply if—
a
the recipient is a UK resident company which receives the manufactured interest 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 919(2) if the payer had been UK resident F3and section 919(1A) did not apply.
4
If the payer would not have been required to deduct any sum under section 919(2), the recipient is not required to account for and pay any income tax under this section.
5
For examples of cases in which subsection (4) applies see (in particular)—
section 921 (cases where interest on underlying securities paid gross), and
Chapter 11 (payments between companies etc: exception from duties to deduct).
6
This section is subject to—
section 583 (manufactured payments exceeding underlying payments), and
section 585 (manufactured payments: power to deal with special cases).
7
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.
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)