xmlns:atom="http://www.w3.org/2005/Atom" xmlns:atom="http://www.w3.org/2005/Atom"

PART 4U.K.THE TREATMENT OF PARTICIPANTS IN AUTHORISED INVESTMENT FUNDS

CHAPTER 3U.K.PARTICIPANTS CHARGEABLE TO CORPORATION TAX

Dividend distributionsU.K.

GeneralU.K.

48.—(1) Paragraph (2) applies if—

(a)a dividend distribution for a distribution period is made to a participant by the legal owner of an authorised investment fund, and

(b)on the distribution date for that distribution period the participant is within the charge to corporation tax.

(2) [F1Subject to paragraphs (2A)[F2, (2B) and (2BA)],] for the purpose of computing the corporation tax chargeable upon the participant, the unfranked part of the dividend distribution is treated—

(a)as an annual payment and not as a dividend distribution or an interest distribution; and

(b)as having been received by the participant after deduction of [F3tax at a rate equal to the basic rate of income tax] for the [F4tax year] in which the distribution date falls, from a corresponding gross amount.

[F5(2A) But paragraph (2) does not apply to a dividend distribution to which [F6Chapter 2 of Part 3 of CTA 2009] applies [F7unless the dividend distribution is made to—

(a)an insurance company in respect of any non-BLAGAB long-term business carried on by it, or

(b)an insurance special purpose vehicle that is not an insurance company in respect of any long-term business carried on by it that does not consist wholly of PHI business.

Expressions used in paragraph (a) or (b) have the same meaning as they have in Part 2 of FA 2012].

(2B) If, on the distribution date, the participant is the manager of the authorised investment fund, paragraph (2) shall not apply to the extent that the rights in respect of which the dividend distribution is made are held by him in the ordinary course of the manager’s business as manager of the fund.]

[F8(2BA)  Paragraph (2)(b) does not apply to so much of any dividend distribution as on a just and reasonable apportionment is attributable to an unallowable arrangement.

(2BB)  For the purposes of paragraph (2BA), an unallowable arrangement is an arrangement the main purpose or one of the main purposes of which is to secure that an amount of tax, or an increased amount of tax, is treated as deducted under paragraph (2)(b).

(2BC)  In paragraph (2BB), “arrangement” includes any arrangement, agreement, scheme, transaction, series of transactions or understanding (whether or not legally enforceable).]

[F9(2C) Regulation 48A makes provision in relation to the unfranked part of the dividend distribution treated as an annual payment under paragraph (2)(a) and regulation 48B makes provision in relation to the tax treated as deducted under paragraph (2)(b).]

(3) Regulation 49 explains how to calculate the unfranked part of the dividend distribution.

[F10(4) This regulation does not apply in respect of a holding in a qualified investor scheme if the scheme has not met the genuine diversity of ownership condition in regulation [F119A] in relation to an accounting period.]

Textual Amendments

F2Words in reg. 48(2) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) (Amendment) Regulations 2012 (S.I. 2012/519), regs. 1(1), 5(2)

F3Words in reg. 48(2)(b) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) (Amendment No. 2) Regulations 2010 (S.I. 2010/1642), regs. 1(1), 4(2)

F6Words in reg. 48(2A) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) (Amendment) Regulations 2010 (S.I. 2010/294), regs. 1(1), 14

F8Reg. 48(2BA)-(2BC) inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) (Amendment) Regulations 2012 (S.I. 2012/519), regs. 1(1), 5(3)

F9Reg. 48(2C) inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) (Amendment No. 2) Regulations 2010 (S.I. 2010/1642), regs. 1(1), 4(3)