Finance Act 2009

Section 58

SCHEDULE 29 Manufactured overseas dividends

Repos

1 (1) Schedule 23A to ICTA (manufactured dividends and interest) is amended as follows.

(2) In paragraph 4, in sub-paragraph (4)—

(a) in paragraph (a), for “the amount deducted under section 922(2) of ITA 2007 or (as the case may be)” substitute “the relevant amount in relation to the amount deducted under section 922(2) of ITA 2007 or the whole of the amount”,

(b) in paragraph (b), for “the amount so deducted or” substitute “the relevant amount in relation to the amount so deducted or the whole of the amount”, and

(c) insert at the end—

“For the meaning of references in this paragraph to the relevant amount in relation to an amount deducted under section 922(2) of ITA 2007, see paragraph 4A.”

(3) After that paragraph insert—

“4A(1) A reference in paragraph 4(4)(a) or (b) to the relevant amount in relation to an amount deducted under section 922(2) of ITA 2007 is—

(a) where the deduction is made in respect of a manufactured overseas dividend that is treated as paid under paragraph 13(1) of Schedule 13 to FA 2007 (sale and repurchase of securities), to amount A, and

(b) otherwise, to the amount deducted under section 922(2) of ITA 2007.

(2) Amount A is—

(a) in a case to which sub-paragraph (3) applies, the amount deducted under section 922(2) of ITA 2007,

(b) in a case to which sub-paragraph (4) applies—

(i) the amount deducted under section 922(2) of ITA 2007, less

(ii) the excess mentioned in that sub-paragraph, and

(c) in any other case, nil.

(3) This sub-paragraph applies to a case in which—

(a) an amount is actually paid by way of manufactured overseas dividend,

(b) the amount so paid equals the relevant net amount, and

(c) it is reasonable to assume that, in deciding the repurchase price of the securities, no account was taken of the fact that the amount would be so paid.

(4) This sub-paragraph applies to a case in which—

(a) an amount is actually paid by way of manufactured overseas dividend,

(b) the amount so paid exceeds the relevant net amount, and

(c) it is reasonable to assume that, in deciding the repurchase price of the securities, no account was taken of the fact that the amount would be so paid.

(5) In this paragraph “the repurchase price” of the securities means the price at which the payer of the manufactured overseas dividend is entitled or obliged to sell the securities, or similar securities, to the recipient of the manufactured overseas dividend.

(6) In this paragraph “the securities” means the securities in respect of which the overseas dividend of which the manufactured overseas dividend is representative is paid.

(7) In this paragraph “the relevant net amount” means—

(a) the gross amount of the overseas dividend of which the manufactured overseas dividend is representative, less

(b) the amount deducted under section 922(2) of ITA 2007.”

Stock lending

2 (1) Section 736B of ICTA (deemed manufactured payments in the case of stock lending arrangements) is amended as follows.

(2) In subsection (2), for “subsection (2A)” substitute “subsections (2A) and (2B)”.

(3) After subsection (2A) insert—

“(2B) In its application by virtue of subsection (2), paragraph 4(4) of Schedule 23A has effect as if—

(a) in paragraph (a), the words from “but paid after” to the end were omitted, and

(b) paragraph (b) were omitted.”

Commencement

3 (1) The amendments made by paragraph 1 have effect in relation to overseas dividends paid on or after 22 April 2009.

(2) The amendments made by paragraph 2 have effect in relation to interest on securities paid on or after 22 April 2009.

(3) In this paragraph—

• “interest” has the same meaning as in section 736B of ICTA;

• “overseas dividend” has the same meaning as in Schedule 23A to ICTA.