The Income Tax (Manufactured Overseas Dividends) Regulations 1993

Tax treatment of approved manufactured overseas dividends paid to approved United Kingdom intermediaries or approved United Kingdom collecting agents

4.—(1) For the purposes of the provisions of the Tax Acts relating to the charge to tax under Schedule D other than paragraph 4(3) of Schedule 23A, an approved manufactured overseas dividend paid in the circumstances prescribed in paragraph (2)–

(a) shall not be treated as an annual payment pursuant to paragraph 4(2) of Schedule 23A;

(b) shall be paid without deduction of an amount on account of income tax;

(c) where the maker of the payment is an investment company within the meaning of section 130 of the Taxes Act, shall be treated as if it was an expense of management in relation to that company.

(2) The circumstances prescribed by this paragraph are where an approved manufactured overseas dividend is paid to an approved United Kingdom intermediary or an approved United Kingdom collecting agent by an overseas dividend manufacturer who–

(a) is resident in the United Kingdom or, if not so resident, makes the payment in the course of a trade which he carries on through a branch or agency in the United Kingdom, and

(b) is not an approved United Kingdom intermediary.

(3) Subject to paragraph (4), the approved United Kingdom intermediary or approved United Kingdom collecting agent referred to in paragraph (2) shall account for and pay an amount of tax in respect of the manufactured overseas dividend which he receives equal to that which the maker of the payment would have been required to account for and pay had paragraph 4(2) of Schedule 23A applied to the payment.

(4) Paragraph (3) shall not apply where–

(a) the approved United Kingdom intermediary is entitled under regulation 5 to pay without deduction of tax an approved manufactured overseas dividend representative of the same overseas dividend as is represented by the approved manufactured overseas dividend received by him, or

(b) the approved United Kingdom collecting agent has entered into arrangements with the Board under the Double Taxation Relief Regulations enabling him to pay without deduction of tax an approved manufactured overseas dividend representative of the same overseas dividend as is represented by the approved manufactured overseas dividend received by him, or

(c) the approved United Kingdom collecting agent is required to pay to an approved United Kingdom intermediary an approved manufactured overseas dividend representative of the same overseas dividend as is represented by the approved manufactured overseas dividend received by him, the approved United Kingdom intermediary is entitled as mentioned in sub–paragraph (a) above and issues a notice to the approved United Kingdom collecting agent authorising him to make the payment without deduction of tax.