Legalize / United Kingdom / Public General Act

Income Tax Act 2007

Type Public General Act

Publication 2007-03-20

Last updated 2026-01-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Payments of UK public revenue dividends which are payable gross

893

(1) A payment of a UK public revenue dividend is payable gross if—

(a) it is a payment of interest on gross-paying government securities, and

(b) no deduction at source application has effect in respect of the securities at the time the payment is made (see section 895).

(2) In this Chapter “gross-paying government securities” means—

(a) gilt-edged securities (see section 1024),

(aa) securities, so far as they are not gilt-edged securities, issued or treated as issued under—

(i) the National Loans Act 1939, or

(ii) the National Loans Act 1968, or

(b) securities which are the subject of a Treasury direction under section 894(3).

Treasury directions

894

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The Treasury may, at the request of the Department of Finance and Personnel for Northern Ireland, direct that any securities issued under section 11(1)(c) of the Exchequer and Financial Provisions Act (Northern Ireland) 1950 (c. 3 (N.I.)) are gross-paying government securities.

(4) In relation to any securities which are gross-paying government securities by virtue of a direction under subsection (3)—

(a) references in sections 895 and 896 to “the Registrar” are to be read as references to the bank in the books of which the securities are registered or inscribed, and

(b) references in those sections to the Treasury are to be read as references to the Department of Finance and Personnel for Northern Ireland.

(5) A direction under subsection ... (3) in respect of any securities may provide that the direction is to have effect in relation only to payments of interest on the securities made on or after a date specified in the direction.

Deduction at source applications

Deduction at source application

895

(1) The holder of registered gross-paying government securities may make a deduction at source application in respect of the securities.

(2) A deduction at source application in respect of any securities is an application—

(a) for payments of interest on those securities to be subject to the duty to deduct sums representing income tax under section 892,

(b) made to the Registrar, and

(3) A deduction at source application in respect of any securities has effect from the date which is one month after the date on which it is made until—

(a) the securities cease to be registered in the name of the person who made the application, or

(b) the application ceases to have effect under section 896 following its withdrawal in accordance with that section.

(4) If any registered gross-paying government securities are held on trust, the holders of the securities may make a deduction at source application in respect of them without the consent of any other person.

(5) Subsection (4) applies despite anything in the instrument creating the trust.

(6) In this Chapter—

“registered” means—entered in the register of the Registrar, orentered in a register maintained in accordance with regulations under section 785 of the Companies Act 2006 (provision enabling procedures for evidencing and transferring title), and

“the Registrar” means the person or persons appointed in accordance with regulations under section 47(1)(b) of FA 1942 (see regulation 3 of the Government Stock Regulations 2004 (S.I. 2004/1611)).

Withdrawal of application

896

(1) A deduction at source application may be withdrawn by notice given to the Registrar by the holder of the securities.

(2) The notice must be given in such form as the Registrar may, with the approval of the Treasury, prescribe.

(3) If withdrawn, a deduction at source application ceases to have effect on the date which is one month after the date on which the notice of withdrawal is received by the Registrar.

Regulations

Power to make regulations

897

(1) The Commissioners for Her Majesty's Revenue and Customs may by regulations—

(a) make provision as to the time and manner in which persons are to account for and pay income tax in respect of payments from which they are required to deduct sums representing income tax under section 892, and

(b) otherwise modify the provisions of section 892 and Chapters 15 and 16 in their application to such payments.

(2) Regulations under this section may—

(a) make different provision for different descriptions of UK public revenue dividend and for different circumstances, and

(b) contain incidental, supplemental, consequential and transitional provision and savings.

(3) The Commissioners for Her Majesty's Revenue and Customs must not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.

Chapter 6 — Deduction from annual payments and patent royalties

Introduction

Overview of Chapter

898

(1) This Chapter deals with the deduction of sums representing income tax from—

(a) qualifying annual payments, and

(b) royalties or other sums paid in respect of the use of patents.

(2) See also—

(a) Chapter 11 (payments between companies etc) for an exception from the duties to deduct sums representing income tax under this Chapter,

(b) Chapter 4 of Part 8, which gives relief for certain payments from which sums representing income tax must be deducted under this Chapter, and

(c) section 615(3) of ICTA (exemption from tax in respect of certain pensions) which contains a further exception from the duties to deduct sums representing income tax under this Chapter.

(3) If a payment to which a provision of this Chapter applies is also one to which section 906 applies, it is treated as not being a payment to which a provision of this Chapter applies.

Meaning of “qualifying annual payment”

899

(1) In this Chapter “qualifying annual payment” means an annual payment that meets the conditions in subsections (2) to (5).

(2) The payment must arise in the United Kingdom.

(3) If the recipient is a person other than a company, the payment must be—

(a) a payment charged to income tax under—

(i) Chapter 7 of Part 4 of ITTOIA 2005 (purchased life annuity payments),

(ii) section 579 of that Act (royalties etc from intellectual property),

(iii) Chapter 4 of Part 5 of that Act (certain telecommunication rights: non-trading income), or

(iv) Chapter 7 of Part 5 of that Act (annual payments not otherwise charged), or

(b) a payment charged to income tax under Part 9 of ITEPA 2003 because section 609 or 611 of that Act applies to it (certain employment-related annuities).

(4) If the recipient is a company, the payment must be—

(a) a payment charged to income tax as mentioned in subsection (3)(a), or

(b) a payment which is—

(i) required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit, or

(ii) from a source in the United Kingdom and chargeable to corporation tax under Chapter 7 of Part 10 of that Act (annual payments not otherwise charged) or regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013.

(5) The payment must not be—

(a) interest,

(b) a payment which is a qualifying payment for the purposes of Chapter 2 of Part 6 of CTA 2010 (certain payments to charity),

(d) a payment in relation to which income tax is treated as having been paid under section 494(3) (income tax treated as paid by beneficiary or settlor in relation to discretionary trust),

(e) a payment which would fall within paragraph (d) but for the fact that the trustees making the payment are non-UK resident, or

(f) an annual payment to which section 904 applies (annual payments for dividends or non-taxable consideration).

Duty to deduct from annual payments

Deduction from commercial payments made by individuals

900

(1) This section applies to any payment made in a tax year if—

(a) it is a qualifying annual payment,

(b) the person who makes it is an individual, and

(2) The individual must, on making the payment, deduct from it a sum representing income tax on it at the basic rate in force for the tax year.

(3) Income tax equal to the sum required to be deducted is to be collected through the individual's self-assessment return (see Chapter 17).

Deduction from annual payments made by other persons

901

(1) This section applies to any payment made in a tax year if—

(a) it is a qualifying annual payment, and

(b) the person who makes it is not an individual.

(2) But this section does not apply if—

(a) an individual's personal representatives make the payment,

(b) the individual would have been liable to make it if the individual had not died, and

(c) the payment would not have been made for genuine commercial reasons in connection with the individual's trade, profession or vocation, had it been made by the individual.

(3) If the person who makes the payment has some modified net income for the tax year (see section 1025)—

(a) the person must, on making it, deduct from it a sum representing income tax on it at the basic rate in force for the tax year, and

(b) income tax equal to the sum required to be deducted is to be collected through the person's self-assessment return (see Chapter 17).

(4) If the person who makes the payment has no modified net income for the tax year the person by or through whom the payment is made must, on making it, deduct from it a sum representing income tax on it at the basic rate in force for the tax year in which the payment is made .

(5) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under subsection (4)—

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

Meaning of “applicable rate” in section 901

902

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duty to deduct from patent royalties

Deduction from patent royalties

903

(1) This section applies to any payment made in a tax year if—

(a) it is a payment of a royalty or other sum in respect of the use of a patent, and

(b) it meets the conditions in subsections (2) to (4).

(2) The payment must not be—

(a) a qualifying annual payment, or

(b) an annual payment to which section 904 applies (annual payments for dividends or non-taxable consideration).

(3) The payment must arise in the United Kingdom.

(4) The payment must be one that is charged to income tax or corporation tax.

(5) If the person who makes the payment is an individual—

(a) the person must, on making the payment, deduct from it a sum representing income tax on it at the basic rate in force for the tax year, and

(b) income tax equal to the sum required to be deducted is to be collected through the person's self-assessment return (see Chapter 17).

(6) If the person who makes the payment is not an individual, and has some modified net income for the tax year (see section 1025)—

(a) the person must, on making the payment, deduct from it a sum representing income tax on it at the basic rate in force for the tax year, and

(b) income tax equal to the sum required to be deducted is to be collected through the person's self-assessment return (see Chapter 17).

(7) If the person who makes the payment—

(a) is not an individual, and

(b) has no modified net income for the tax year,

the person by or through whom the payment is made must, on making it, deduct from it a sum representing income tax on it at the basic rate in force for the tax year.

(8) See Chapter 8 which makes special provision in relation to royalties (double taxation arrangements: deduction at treaty rate and EU companies: discretion to pay gross).

(9) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under subsection (7)—

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

Supplementary

Annual payments for dividends or non-taxable consideration

904

(1) For the purposes of section 899(5)(f) and 903(2)(b) this section applies to an annual payment which meets the conditions in subsections (2) to (7).

(2) The payment must be—

(a) a payment charged to income tax under Part 5 of ITTOIA 2005 (miscellaneous income), or

(b) a payment which is—

(i) required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit, or

(ii) from a source in the United Kingdom and chargeable to corporation tax under Chapter 7 of Part 10 of that Act (annual payments not otherwise charged) or regulation 15 of the Unauthorised Unit Trusts (Tax) Regulations 2013.

(3) The payment must be made under a liability incurred for consideration in money or money's worth all or any of which—

(a) consists of a dividend or the right to receive a dividend, or

(b) is not required to be brought into account in calculating for the purposes of income tax or corporation tax the income of the person making the payment.

(4) The payment must not be a payment of income—

(a) which arises under a settlement made by one party to a marriage or civil partnership by way of provision for the other—

(i) after the dissolution or annulment of the marriage or civil partnership, or

(ii) while they are separated under an order of a court, or under a separation agreement, or if the separation is likely to be permanent, and

(b) which is payable to, or applicable for the benefit of, the other party.

(5) The payment must not be made by an individual for genuine commercial reasons in connection with the individual's trade, profession or vocation.

(6) The payment must not be made to an individual under a liability incurred at any time in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person with a subsequent interest.

(7) The payment must not be a payment of an annuity granted in the ordinary course of a business of granting annuities.

(8) In the application of this section to Scotland the reference in subsection (6) to settled property is to be read as a reference to property held in trust.

Interpretation of Chapter

905

In this Chapter “individual” includes a Scottish partnership if at least one partner is an individual.

Chapter 7 — Deduction from other payments connected with intellectual property

Certain royalties etc where usual place of abode of owner is abroad

906

(1) This section applies to any payment made in a tax year where condition A or condition B is met.

(2) Condition A is that—

(a) the payment is a royalty, or a payment of any other kind, for the use of, or the right to use, intellectual property (see section 907),

(b) the usual place of abode of the owner of the intellectual property is outside the United Kingdom, and

(3) Condition B is that—

(a) the payment is a payment of sums payable periodically in respect of intellectual property,

(b) the person entitled to those sums (“the assignor”) assigned the intellectual property to another person,

(d) the payment is charged to income tax or corporation tax.

(4) But this section does not apply if the payment is made in respect of copies of works, or articles, which have been exported from the United Kingdom for distribution outside the United Kingdom.

(5) The person by or through whom the payment is made must, on making it, deduct from it a sum representing income tax on it at the basic rate in force for the tax year.

(6) See—

(a) Chapter 8 which makes special provision in relation to royalties (double taxation arrangements: deduction at treaty rate and EU companies: discretion to pay gross), and

(b) Chapter 11 (payments between companies etc) for an exception from the duty to deduct sums representing income tax under this section.

(7) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section—

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

(8) If a payment to which this section applies is also one to which a provision of Chapter 6 applies, it is treated as not being a payment to which a provision of Chapter 6 applies.

Meaning of “relevant intellectual property right”

907

(1) In section 906 “intellectual property” means—

(a) copyright of literary, artistic or scientific work,

(b) any patent, trade mark, design, model, plan, or secret formula or process,

(d) public lending right in respect of a book.

(2) In this section “copyright of literary, artistic or scientific work” does not include copyright in—

(a) a cinematographic film or video recording, or

(b) the sound-track of a cinematographic film or video recording, except so far as it is separately exploited.

Royalty payments etc made through UK resident agents

908

(1) If—

(a) a payment to which section 906 applies is made through an agent who is UK resident, and

(b) the agent is entitled as against the owner of the right to deduct a sum as commission for services provided,

section 906(5) and Chapters 8 (deduction at special rates), 15 and 16 (collection) apply as if the amount of the payment were the amount net of the sum deductible as commission.

(2) But if the person by or through whom the payment is made does not know the commission is payable, or does not know its amount—

(a) the sum representing income tax required to be deducted under section 906 must be calculated in the first instance on the total amount of the payment, and

(b) the return to be made under Chapter 15 or the account of the payment under Chapter 16, must be based on that total amount.

Royalty payments: further provision

909

(1) A payment to which section 906 applies is treated for all income and corporation tax purposes as made when it is made by the first person who makes it, not when it is made by or through any other person.

(2) If, under section 906, a sum representing income tax must be deducted from a payment, any agreement to make the payment without deduction of that sum is void.

(3) Section 906—

(a) applies to payments on account of royalties as it applies to payments of royalties, and

(b) applies to payments on account of sums payable periodically as it applies to payments of sums payable periodically.

Proceeds of a sale of patent rights

Proceeds of a sale of patent rights: payments to non-UK residents

910

(1) This section applies if a non-UK resident sells the whole or part of any patent rights and is chargeable in respect of the sale—

(a) to income tax under section 587 of ITTOIA 2005, or

(b) to corporation tax under section 912 of CTA 2009.

(2) The person by or through whom the proceeds of the sale are paid must, on making any payment of—

(a) the proceeds, or

(b) an instalment of the proceeds,

deduct from it a sum representing income tax on the chargeable amount at the basic rate in force for the tax year in which the payment is made.

(3) In subsection (2) “the chargeable amount” means—

(a) so much of the proceeds or instalment as consists of a capital sum, less

(b) any incidental expenses of the sale which are deducted before payment.

(4) Sections 597 to 599 of ITTOIA 2005 (licences connected with patents etc) apply for the purposes of this section as they apply for the purposes of sections 587 to 596 of that Act.

(5) Section 4 of CAA 2001 (meaning of “capital sums” etc) applies in relation to this section as it applies in relation to that Act.

(6) For further provision about the sum required to be deducted, see—

(a) section 595 of ITTOIA 2005 (certain rules affecting the seller's income tax position do not affect the amount to be deducted), and

(b) section 919 of CTA 2009 (certain rules affecting the seller's corporation tax position do not affect the amount to be deducted).

(7) See Chapter 11 (payments between companies etc) for an exception from the duty to deduct sums representing income tax under this section.

(8) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section—

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

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

Deduction at special rates

Double taxation arrangements: deduction at treaty rate

911

(1) This section applies if—

(a) a company pays a royalty from which it is required to deduct a sum representing income tax under Chapter 6 or 7,

(b) the income tax in respect of the payment is collectible under Chapter 15 or 16, and

(c) the company reasonably believes that, at the time the payment is made, the payee is entitled to relief in respect of the payment under double taxation arrangements.

(2) The company may calculate the sum to be deducted from the payment under Chapter 6 or 7 by reference to the treaty rate.

(3) But, if the payee is not at the time entitled to such relief, this Part has effect as if subsection (2) had never applied in relation to the payment.

(4) In this section “the treaty rate” means the rate of income tax appropriate to the payee under the arrangements.

Power to make directions disapplying section 911

912

(1) This section applies if an officer of Revenue and Customs is not satisfied that the payee will be entitled to relief under double taxation arrangements in respect of one or more payments of royalties that a company is to make.

(2) The officer may direct the company that section 911 is not to apply to the payment or payments.

(3) A direction under subsection (2) may be varied or revoked by a later direction.

Interpretation of sections 911 and 912

913

(1) In sections 911 and 912 “royalty” includes—

(a) a payment received as consideration for the use of, or the right to use, a copyright, patent, trade mark, design, process or information, and

(b) the proceeds of the sale of the whole or part of any patent rights.

(2) In sections 911 and 912 “payee” means the person beneficially entitled to the income in respect of which the payment is made.

...

EU companies: discretion to make payment gross

914

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to make directions disapplying section 914

915

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duty of payee to notify if payment not exempt

916

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary

917

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 9 — Manufactured payments

Manufactured dividends

Manufactured dividends on UK shares: Real Estate Investment Trusts

918

(1) This section applies if—

(a) a person pays a manufactured payment as mentioned in section 614ZC(1) and the amount payable is representative of a dividend (a “manufactured dividend”), and

(b) the manufactured dividend is representative of a dividend which is—

(i) paid by a company UK REIT in respect of profits or gains (or both) of the company's property rental business, or

(ii) paid by the principal company of a group UK REIT in respect of profits or gains (or both) of property rental business of members of the group.

(2) This section applies only so far as the manufactured dividend is representative of such a dividend.

(3) If the payer—

(a) is UK resident, or

(b) pays the manufactured dividend in the course of a trade carried on through a branch or agency in the United Kingdom,

regulations under section 973 apply to the payer as they apply to a company UK REIT, with any necessary modifications.

(3A) But subsection (3) does not apply if—

(a) the manufactured dividend is paid by a UK resident company 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.

(4) The Treasury may by regulations provide, in a case where the payer—

(a) is non-UK resident and pays the manufactured dividend otherwise than in the course of a trade carried on through a branch or agency in the United Kingdom, or

(b) is a UK resident company and pays the manufactured dividend in the course of a trade carried on through a permanent establishment in a territory outside the United Kingdom and section 18A of CTA 2009 has effect in relation to the company for the accounting period in which it is paid,

for a United Kingdom recipient of the manufactured dividend to be liable to account for and pay income tax in respect of it.

(5) A United Kingdom recipient is a recipient who—

(a) is UK resident, or

(b) is non-UK resident but receives the manufactured dividend for the purposes of a trade carried on by the recipient through a branch or agency in the United Kingdom.

(5A) But a UK resident is not a United Kingdom recipient if—

(a) it is a UK resident company which receives the manufactured dividend 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.

(6) The amount of income tax which the recipient may be liable to account for and pay under regulations under subsection (4) is equal to the amount of the sum representing income tax which the payer would have been required to deduct in accordance with regulations under section 973.

(7) For the purposes of—

(a) regulations under section 973 as applied by subsection (3), and

(b) regulations under subsection (4),

the “gross amount” of a manufactured dividend to which this section applies is equal to the gross amount of the dividend of which it is representative.

(8) In subsection (1) “gains” includes chargeable gains.

Manufactured interest

Manufactured interest on UK securities: payments by UK residents etc

919

(1) This section applies if—

(a) a person pays a manufactured payment as mentioned in section 614ZC(1),

(b) the amount payable is representative of interest on UK securities (“manufactured interest”), and

(i) is UK resident, or

(ii) pays the manufactured interest in the course of a trade carried on in the United Kingdom through a branch or agency.

(1A) But this section does not apply if—

(a) the manufactured interest is paid by a UK resident company 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 payer of the manufactured interest must, on making the payment, deduct from the gross amount of the manufactured interest a sum representing income tax on it at the basic rate in force for the tax year in which the payment is made.

(3) The “gross amount” of manufactured interest is equal to the gross amount of the interest of which it is representative.

(4) This section is subject (in particular) to—

section 921 (cases where interest on underlying securities paid gross), and

Chapter 11 (payments between companies etc: exception from duties to deduct).

(5) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section—

(a) see Chapter 15 if the payer of the manufactured interest is a company, and

(b) otherwise see Chapter 16.

(6) In subsection (1) “UK securities” means securities of—

(a) the government of the United Kingdom,

(b) a local authority in the United Kingdom,

(d) a UK resident company or other UK resident body.

(7) But “UK securities” does not include shares in a UK resident company.

(8) In this section “securities” includes loan stock or any similar security.

Foreign payers of manufactured interest: the reverse charge

920

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cases where interest on underlying securities paid gross

921

(1) This section applies to manufactured interest which is representative of interest on—

(a) gilt-edged securities, or

(b) securities which are not gilt-edged securities but on which the interest is payable without deduction of income tax.

(2) Section 919(2) does not require any deduction of a sum representing income tax to be made on the payment of the manufactured interest.

(3) In this section “manufactured interest” has the same meaning as in section 919.

Manufactured overseas dividends

Manufactured overseas dividends: payments by UK residents etc

922

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign payers of manufactured overseas dividends: the reverse charge

923

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to reduce section 923 liability

924

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to provide set-off entitlement

925

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary

Interpretation of Chapter

926

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) References in this Chapter to a trade carried on through a branch or agency are to be read, in relation to a company, as references to a trade carried on through a permanent establishment.

Regulation-making powers: general

927

Regulations under this Chapter may make different provision for different cases.

Chapter 10 — Deduction from non-commercial payments by companies

Chargeable payments connected with exempt distributions

928

(1) This section applies to any payment chargeable to tax under section 1086 of CTA 2010 (chargeable payments made within 5 years of an exempt distribution).

(2) The person by or through whom the payment is made must, on making the payment, deduct from it a sum representing income tax on it at the basic rate in force for the tax year in which it is made.

(3) See Chapter 11 (payments between companies etc) for an exception from the duty to deduct sums representing income tax under this section.

(4) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under this section—

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

(5) In this section “payment” does not include a transfer of money's worth that is treated as a payment for the purposes of sections 1086 to 1090 of CTA 2010 (see section 1086(6) of that Act).

Chapter 11 — Payments between companies etc: exception from duties to deduct

Introduction

Overview of Chapter

929

(1) This Chapter makes provision allowing some payments made by companies, local authorities and qualifying partnerships to be paid gross where they would otherwise be subject to specified duties to deduct sums representing income tax under this Part.

(2) Section 930 disapplies specified duties to deduct where a payment is made by a company, local authority or qualifying partnership which reasonably believes that the payment is an excepted payment.

(3) Section 931 confers power on an officer of Revenue and Customs to disapply section 930 by direction.

(4) Section 932 defines “qualifying partnership”.

(5) Sections 933 to 937 make provision as to when a payment is an excepted payment.

(6) Section 938 deals with what happens when a company, local authority or qualifying partnership makes a payment without deducting a sum representing income tax under a reasonable but incorrect belief that the payment is an excepted payment.

Exception from duties to deduct for excepted payments

Exception from duties to deduct sums representing income tax

930

(1) The duties to deduct sums representing income tax mentioned in subsection (2) do not apply to a payment if—

(a) it is made by a company, local authority or qualifying partnership, and

(b) at the time the payment is made, the company, authority or partnership reasonably believes that it is an excepted payment.

(2) The duties to deduct are those under—

(a) section 874(2) (certain payments of yearly interest),

(b) section 889(4) (payments in respect of building society securities),

(d) section 903(7) (patent royalties),

(e) section 906(5) (certain royalty payments etc where the owner lives abroad),

(f) section 910(2) (proceeds of a sale of patent rights paid to non-UK residents),

(g) section 919(2) (manufactured interest on UK securities: payments by UK residents etc), and

(h) section 928(2) (chargeable payments connected with exempt distributions).

(3) Subsection (1) has effect subject to any directions under section 931.

(4) Subsection (1) does not apply to a payment made by a company, or qualifying partnership, acting as trustee or agent for another person.

Power to make directions disapplying section 930

931

(1) An officer of Revenue and Customs may give a direction to a company, local authority or qualifying partnership directing that section 930 is not to apply in relation to any payment that—

(a) is made by the company, authority or partnership after the giving of the direction, and

(b) is specified in the direction or is of a description so specified.

(2) A direction under this section may be given only if the officer has reasonable grounds for believing, as respects each payment to which the direction relates, that the payment will not be an excepted payment at the time it is made.

(3) A direction under this section may be varied or revoked by a later direction.

(4) A variation or revocation of a direction under this section has effect only in relation to payments made after the date of the variation or revocation.

Meaning of “qualifying partnership”

932

For the purposes of this Chapter a partnership is a “qualifying partnership” if any partner in the partnership is a company or a local authority.

Excepted payments

UK resident companies

933

A payment is an excepted payment if the person beneficially entitled to the income in respect of which the payment is made is a UK resident company.

Non-UK resident companies

934

(1) A payment is an excepted payment if each of the following conditions is met in relation to the payment.

(2) The person beneficially entitled to the income in respect of which the payment is made must be a non-UK resident company.

(3) The non-UK resident company must carry on a trade in the United Kingdom through a permanent establishment.

(4) The payment must be one that is required to be brought into account in calculating the chargeable profits (within the meaning given by section 19 of CTA 2009) of the non-UK resident company.

PEP and ISA managers

935

(1) A payment is an excepted payment if each of the following conditions is met in relation to the payment.

(2) The person to whom the payment is made must be, or must be the nominee of, the plan manager of a plan of a kind to which regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) apply.

(3) The plan manager must receive the payment in respect of investments under the plan.

Recipients who are to be paid gross

936

(1) A payment is an excepted payment if it is made to, or to the nominee of, a recipient who is specified in subsection (2) as a recipient who is to be paid gross.

(2) The following recipients are to be paid gross—

(a) a local authority,

(b) a health service body within the meaning of section 986 of CTA 2010,

(d) a charity,

(e) a body for the time being mentioned in section 468 of CTA 2010 (bodies that are allowed the same exemption from tax as charitable companies the whole income of which is applied to charitable purposes),

(f) a body which is an association for the purposes of section 469(1)(a) of CTA 2010 (scientific research associations) and complies with the conditions in subsections (2) and (3) of that section,

(g) the scheme administrator of a registered pension scheme,

(h) the sub-scheme administrator of a sub-scheme which forms part of a split scheme pursuant to the Registered Pensions (Splitting of Schemes) Regulations 2006 (S.I. 2006/569),

(i) the trustees of a scheme entitled to exemption under section 613(4) of ICTA (Parliamentary pension funds), and

(j) the persons entitled to receive the income of a fund entitled to exemption under section 614(3) of ICTA (certain colonial, etc pension funds).

(3) The Treasury may by order amend this section so as to add to, restrict or otherwise alter the persons or bodies who are to be paid gross.

Partnerships

937

(1) A payment is an excepted payment if each of the following conditions are met.

(2) A partnership must be beneficially entitled to the income in respect of which the payment is made.

(3) Each partner in the partnership must be—

(a) a person or body mentioned in section 936, or

(b) a person or body to whom one of subsections (4) to (6) applies.

(4) This subsection applies to a UK resident company.

(5) This subsection applies to a company that—

(a) is non-UK resident,

(b) carries on a trade in the United Kingdom through a permanent establishment, and

(c) is required to bring into account, in calculating its chargeable profits (within the meaning of section 19 of CTA 2009), the whole of any share of the payment that is attributable to it because of Part 17 of that Act.

(6) This subsection applies to the European Investment Fund.

(7) The Treasury may by order amend this section to add to, restrict or otherwise alter the persons or bodies falling within subsection (3)(b).

Incorrect belief that payment is an excepted payment

Consequences of reasonable but incorrect belief

938

(1) This section applies if—

(a) a payment is made by a company, local authority or qualifying partnership without a sum representing income tax on the payment being deducted from it,

(b) at the time the payment is made, the company, authority or partnership reasonably believes that it is an excepted payment,

(c) one of the duties to deduct sums representing income tax mentioned in section 930(2) would apply to the payment if the company did not so believe, and

(d) the payment is not an excepted payment at the time it is made.

(2) This Part has effect in relation to the payment as if section 930(1) had never disapplied the duties to deduct mentioned in section 930(2).

Chapter 12 — Funding bonds

Duty to retain bonds where issue treated as payment of interest

939

(1) This section applies if—

(a) there is an issue of funding bonds to a creditor in respect of a liability to pay interest on a debt incurred by a government, public institution, other public authority or body corporate,

(b) by virtue of section 413 of CTA 2009 or section 380 of ITTOIA 2005, the issue is treated as if it were a payment of an amount of interest (“the deemed interest”), and

(c) the person by or through whom the bonds are issued is required, under this Part, to deduct a sum representing income tax from the deemed interest.

(2) The person by or through whom the bonds are issued must retain bonds the value of which is, at the time of their issue, equal to income tax on the deemed interest at the basic rate in force for the tax year in which the bonds are issued.

(3) A person who retains bonds in accordance with subsection (2) is treated as complying with the duty to deduct a sum representing income tax from the deemed interest.

(4) The person may tender the bonds retained in satisfaction of any income tax to be collected from the person in respect of the deemed interest under Chapter 15 or 16.

(4A) If bonds are tendered in accordance with subsection (4), the Commissioners for Her Majesty's Revenue and Customs may tender the bonds in satisfaction of any amount that is payable by the Commissioners to the relevant creditor in connection with the relevant debt.

(4B) For the purposes of subsection (4A)—

(a) “relevant creditor” and “relevant debt” mean the creditor and the debt mentioned in subsection (1)(a), and

(b) a bond is to be taken to have the same value that it had at the time of its issue.

(4C) If bonds that are to be tendered in accordance with subsection (4) or (4A) are subject to restrictions on their tender or transfer, the restrictions do not prevent the bonds from being—

(a) tendered in accordance with that subsection, or

(b) transferred from the person tendering them to the person to whom they are tendered.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) In this Chapter “funding bonds” includes any bonds, stocks, shares, securities or certificates of indebtedness (but does not include any instrument providing for payment in the form of goods or services or a voucher).

Exception from duty to retain bonds

940

(1) This section applies if an issue of funding bonds is treated as a payment of interest (“the deemed interest”) as mentioned in section 939(1) and—

(a) the person by or through whom the bonds are issued is required to retain bonds under section 939(2), but

(b) it is impracticable for the person to do so.

(2) The duty to deduct a sum representing income tax from the deemed interest under this Part does not apply if the person tells the Commissioners for Her Majesty's Revenue and Customs—

(a) the names and addresses of the persons to whom the bonds have been issued, and

(b) the amount of the bonds issued to each person.

(3) Accordingly—

(a) the duty to retain bonds under section 939(2) does not apply, and

(b) the provisions in Chapters 15 and 16 about the collection of income tax in respect of the deemed interest do not apply.

Chapter 13 — Unauthorised unit trusts

Deemed payments to unit holders and deemed deductions of income tax

941

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax to be collected from trustees

942

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation of trustees' income pool

943

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 14 — Tax avoidance: directions for duty to deduct to apply

Directions for deduction from payments to non-UK residents

944

(1) This section applies if it appears to an officer of Revenue and Customs that any person entitled to an amount taxable under—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) Chapter 4 of Part 13 (tax avoidance: sales of occupation income),

is non-UK resident.

(2) The officer may, in relation to any payment forming the whole or part of that amount, direct that the person by or through whom the payment is made must, on making it, deduct from it a sum representing income tax on it at the basic rate in force for the tax year in which the payment is made.

(3) Subsection (2) does not affect the final liability of the person entitled to the amount mentioned in subsection (1) including any liability under section 768(4) or 786(4) (recovery of tax where consideration receivable by person not assessed).

(4) For provision about the collection of income tax in respect of a payment from which a sum must be deducted under subsection (2)—

(a) see Chapter 15 if the person making the payment is a UK resident company, and

(b) otherwise see Chapter 16.

Chapter 15 — Collection: deposit-takers, building societies and certain companies

Introduction

Overview of Chapter

945

(1) This Chapter provides—

(a) for persons who have made payments within section 946 (“section 946 payments”) to make returns of the payments, and

(b) for the collection of income tax in respect of those payments.

(2) Sections 947 and 948 contain definitions and other provisions in relation to the following basic concepts used in the Chapter: “return period” and “accounting period”.

(3) Section 949 requires persons who have made section 946 payments to deliver returns of those payments made in return periods falling within accounting periods, and section 950 requires such persons to deliver returns of those payments made otherwise than in accounting periods.

(4) Section 951 explains—

(a) how much income tax is due from persons in respect of section 946 payments made by them, and

(b) when that income tax must be paid.

(5) Sections 952 to 955 allow persons who have made section 946 payments to make claims for income tax they have suffered to be set off against income tax payable by them in respect of the payments.

(6) Sections 956 to 960 explain what happens in cases where income tax payable in respect of section 946 payments is not paid when it is due, or where returns are incomplete or incorrect.

(7) Sections 961 and 962 contain supplementary provisions.

(8) For further provisions applying to returns and set-off claims under this Chapter, see TMA 1970 (in particular section 113(1) (returns) and section 42 and Schedule 1A (claims)).

Payments within this section

946

The payments within this section are—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) a payment from which a UK resident company is required to deduct a sum representing income tax under—

(i) section 874(2) (payments of yearly interest),

(ii) section 889(4) (payments in respect of building society securities),

(iii) section 892(2) (certain payments of UK public revenue dividends),

(iv) section 901(4) (annual payments made by persons other than individuals),

(v) section 903(7) (patent royalties),

(vi) section 906(5) (royalty payments etc where the owner lives abroad),

(vii) section 910(2) (proceeds of a sale of patent rights paid to non-UK residents),

(viii) section 928(2) (chargeable payments connected with exempt distributions), or

(ix) section 944(2) (directions for deduction from payments to non-UK residents), and

(c) a payment from which a company is required to deduct a sum representing income tax under section 919(2) (manufactured interest on UK securities: payments by UK residents etc).

Return periods

947

(1) For the purposes of this Chapter, the return periods which fall within a person's accounting period are determined as follows.

(2) If at least one quarter date falls within the accounting period, each of the following is a return period which falls within the accounting period—

(a) any complete quarter which falls within the accounting period, and

(b) any part of the accounting period which is not a complete quarter and which—

(i) ends with the first (or only) quarter date in that period, or

(ii) begins immediately after the last (or only) quarter date in that period.

(3) If no quarter date falls within the accounting period, the accounting period itself is to be treated as a return period which falls within the accounting period.

(4) In this section—

“quarter” means a period of three months ending—unless paragraph (b) applies, with the last day of March, June, September or December, orif the person mentioned in subsection (1) is a building society, with the last day of February, May, August or November, and

“quarter date” means—unless paragraph (b) applies, the last day of March, June, September or December, orif the person mentioned in subsection (1) is a building society, the last day of February, May, August or November.

Meaning of “accounting period”

948

(1) In this Chapter “accounting period”, in relation to a deposit-taker who is not a company, means a period for which the deposit-taker's accounts are drawn up.

“Deposit-taker” has the same meaning as in Chapter 2 (see section 853).

(2) See Chapter 2 of Part 2 of CTA 2009 (accounting periods) for provision about accounting periods of companies.

Returns of income tax

Payments in an accounting period

949

(1) This section applies if a person makes a section 946 payment on a date which falls within an accounting period of the person.

(2) The person must deliver a return to an officer of Revenue and Customs for each return period—

(a) which falls within the accounting period, and

(b) in which the person makes a section 946 payment.

(3) The person must deliver the return within 14 days after the end of the return period to which it relates.

(4) The return must show the amount of—

(a) any section 946 payments made by the person in the return period, and

(b) the income tax payable by the person in respect of those payments (see section 951).

Payments otherwise than in an accounting period

950

(1) This section applies if a person makes a section 946 payment on a date which does not fall within an accounting period of the person.

(2) The person must deliver a return to an officer of Revenue and Customs within 14 days after the date on which the payment is made.

(3) The return must show the amount of—

(a) the payment, and

(b) the income tax payable by the person in respect of that payment (see section 951).

Collection and payment of income tax

951

(1) Income tax in respect of a section 946 payment is due, from the person who makes the payment, on the date by which the return on which the payment must be included is required to be delivered.

(2) The income tax due is equal to the sum which the person is required to deduct from the payment under the applicable provision mentioned in section 946.

(3) The income tax is payable by the person without an officer of Revenue and Customs making any assessment.

Set-off

Conditions for a set-off claim

952

(1) A person who makes a section 946 payment may make a set-off claim if conditions A and B are met at the end of a return period which falls within an accounting period of the person.

(2) Condition A is that in the return period the person has—

(a) made a section 946 payment, or

(b) received a payment on which the person has suffered income tax by deduction.

(3) Condition B is that at the end of the return period there is—

(a) a net amount of income tax suffered (see subsection (4)), and

(b) a net amount of income tax payable (see subsection (5)).

(4) There is a net amount of income tax suffered at the end of a return period if—

(a) the person has received any payments on which income tax has been suffered by deduction in the return period or in any previous return period which falls within the accounting period, and

(b) the amount of income tax so suffered by the person on those payments exceeds the amount of such income tax treated as repaid for the accounting period to date as a result of any previous set-off claim.

(5) There is a net amount of income tax payable at the end of a return period if—

(a) the person has made any section 946 payments in the return period or in any previous return period which falls within the accounting period, and

(b) the amount of income tax payable by the person in respect of those payments exceeds the amount of such income tax treated as paid for the accounting period to date as a result of any previous set-off claim.

How a set-off claim works

953

(1) A set-off claim is a claim for the net amount of income tax suffered at the end of the return period to be set off against the net amount of income tax payable at the end of the return period.

(2) The effect of a claim is that, to the extent of the set-off—

(a) the income tax comprised in the net amount of income tax suffered is treated as repaid, and

(b) the income tax comprised in the net amount of income tax payable is treated as paid.

(3) Accordingly—

(a) any liability of the person making the set-off claim to pay any of the income tax treated as paid under subsection (2)(b) is discharged, and

(b) any of that income tax which has been paid is to be repaid to the person.

(4) A set-off claim must be made in a return under section 949 for the return period.

(5) A return may be made under that section for the purposes of making a set-off claim despite the fact that the person making the claim may not have made any section 946 payments in the return period.

(6) Income tax suffered which is taken into account in a set-off claim may not also be taken into account for the purposes of—

(a) section 967 of CTA 2010 (income tax deducted from payments to UK resident company to be set off against corporation tax), or

(b) section 968 of that Act (income tax deducted from payments to non-UK resident company to be set off against corporation tax).

(7) Income tax suffered by a deposit-taker is to be taken into account in a set-off claim only if the payment on which the income tax is suffered is to be taken into account in calculating the deposit-taker's liability to corporation tax.

“Deposit-taker” has the same meaning as in Chapter 2 (see section 853).

Proceedings begun after a set-off claim is made

954

(1) If a set-off claim has been made no proceedings for collecting income tax which would have to be discharged if the claim were allowed may be brought until the claim is finally determined.

(2) Subsection (1) does not affect the date when the income tax is due.

(3) Any income tax underpaid as a result of this section must be paid when the claim is finally determined.

(4) In this section “proceedings” includes proceedings by way of distraint or attachment.

Proceedings begun before a set-off claim is made

955

(1) This section applies if—

(a) a person has made a set-off claim, and

(b) before the claim was made, proceedings were brought for collecting income tax assessed, or interest on income tax assessed, under section 956 or 957.

(2) No effect is to be given to the set-off claim so as to affect or delay the collection or recovery of the income tax, or of interest on that income tax, until the claim is finally determined.

(3) Any income tax overpaid as a result of this section must be repaid when the claim is finally determined.

(4) In this section “proceedings” includes proceedings by way of distraint or attachment or under Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 (taking control of goods).

Assessments and errors

Assessments where section 946 payment included in return

956

(1) This section applies if any income tax in respect of a section 946 payment which is included in a return under this Chapter has not been paid at or before the date mentioned in section 951.

(2) An officer of Revenue and Customs may make an assessment on the person who made the payment.

(3) Income tax may be assessed under this section whether or not it has been paid when the assessment is made.

Assessments in other cases

957

(1) This section applies if an officer of Revenue and Customs thinks—

(a) that there is a section 946 payment which should have been included in a return under this Chapter and which has not been so included, or

(b) that a return under this Chapter is otherwise incorrect.

(2) An officer of Revenue and Customs may make an assessment, to the best of the officer's judgement, on the person who made the return, or who should have made one.

Payer’s duty to deliver amended return

958

(1) This section applies if a person who has made a section 946 payment becomes aware that—

(a) anything which should have been included in a return delivered by the person under this Chapter has not been so included,

(b) anything which should not have been included in a return delivered by the person under this Chapter has been so included, or

(2) The person must deliver an amended return correcting the error to an officer of Revenue and Customs without delay.

(3) If the person delivers an amended return such assessments, adjustments, set-offs or payments or repayments of income tax as are necessary for achieving the objective mentioned in subsection (4) must be made.

(4) The objective is that the resulting liabilities to income tax (including interest on unpaid or overpaid income tax) of the person or any other person are the same as they would have been if a correct return had been delivered.

Application of Income Tax Acts provisions about time limits for assessments

959

(1) This section deals with the application of the provisions of the Income Tax Acts about time limits for making assessments.

(2) So far as the provisions refer or relate to—

(a) the tax year for which an assessment is made, or

(b) the year to which an assessment relates,

they apply to assessments under this Chapter despite the fact that an assessment under this Chapter may relate to a return period which is not a tax year.

(3) Subsection (4) applies if an assessment under this Chapter relates to income tax due in respect of a payment required to be included in a return for a return period under section 949 (payments in an accounting period).

(4) In that case, for the purposes of the provisions mentioned in subsection (1), the assessment is treated as made for the tax year in which the return period ends.

(5) Subsection (6) applies if an assessment under this Chapter relates to income tax due in respect of a payment required to be included in a return under section 950 (payments otherwise than in an accounting period).

(6) In that case, for the purposes of the provisions mentioned in subsection (1), the assessment is treated as made for the tax year in which payment is made.

Further provisions about assessments

960

(1) Income tax assessed on a person under this Chapter is due on the date mentioned in section 951 and an appeal against the assessment does not affect the date when the income tax is due under that section.

(2) On the determination of an appeal against an assessment under this Chapter any income tax overpaid must be repaid.

(3) Any income tax assessable under any one or more of the provisions of this Chapter may be included in a single assessment if all the income tax is due on the same date.

Supplementary

Relationship between Chapter and Income Tax Acts powers

961

Nothing in this Chapter affects any powers conferred by the Income Tax Acts for the recovery of income tax by means of an assessment or otherwise.

Power to make regulations modifying Chapter

962

(1) The Commissioners for Her Majesty's Revenue and Customs may by regulations modify, replace or supplement any of the provisions of this Chapter for the purpose of regulating the time and manner in which persons making section 946 payments—

(a) are to account for and pay income tax which is to be collected from them in respect of those payments, and

(b) are to be repaid income tax in respect of payments received by them.

(2) In particular, regulations under this section may, in relation to income tax for which a person is liable to account,—

(a) modify any provision of Parts 2 to 6 of TMA 1970, or

(b) apply any such provision with or without modifications.

(3) Regulations under this section may—

(a) make different provision for different kinds of payer,

(b) make different provision for different circumstances, and

(c) authorise the Commissioners for Her Majesty's Revenue and Customs, if they think there are special circumstances justifying it, to make special arrangements in relation to—

(i) income tax for which a person is liable to account, or

(ii) the repayment of income tax suffered by a person.

(4) Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings.

(5) The Commissioners for Her Majesty's Revenue and Customs must not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.

(6) References in this Act and in any other enactment to any of the provisions of this Chapter are to be read as references to those provisions as modified, replaced or supplemented by provision made by regulations under this section.

Chapter 16 — Collection: certain payments by other persons

Collection of income tax on certain payments by other persons

963

(1) This section makes provision for the collection of income tax in respect of—

(a) a payment from which a person other than a UK resident company is required to deduct a sum representing income tax under—

(i) section 874(2) (certain payments of yearly interest),

(ii) section 889(4) (payments in respect of building society securities),

(iii) section 892(2) (certain payments of UK public revenue dividends),

(iv) section 901(4) (annual payments made by persons other than individuals),

(v) section 903(7) (patent royalties),

(vi) section 906(5) (royalty payments etc where the owner lives abroad),

(vii) section 910(2) (proceeds of a sale of patent rights paid to non-UK residents),

(viii) section 928(2) (chargeable payments connected with exempt distributions), or

(ix) section 944(2) (directions for deduction from payments to non-UK residents), and

(b) a payment from which a person other than a company is required to deduct a sum representing income tax under section 919(2) (manufactured interest for UK securities: payments by UK residents etc).

(2) The person required to deduct the sum must deliver to an officer of Revenue and Customs an account of the payment without delay.

(3) An officer of Revenue and Customs may make an assessment on that person for income tax equal to the sum required to be deducted.

(4) The provisions of the Income Tax Acts relating to—

(a) persons chargeable to income tax,

(b) income tax assessments, and

apply (unless excluded expressly or by implication) to the assessment, collection and recovery of income tax which is assessable on persons under this section.

Chapter 17 — Collection through self-assessment return

Collection through self-assessment return

964

(1) This section applies if—

(a) a person makes a payment from which the person is required to deduct a sum representing income tax, and

(b) income tax equal to the sum required to be deducted is, under section 900(3), 901(3) or 903(5) or (6), to be collected through the person's self-assessment return.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The income tax is to be treated for the purposes of TMA 1970 as if it were income tax charged on the person or trustee.

(4) Accordingly, the income tax must be taken into account for the purposes of—

(a) the person's or trustee's return under section 8 or 8A of TMA 1970, and

(b) the person's or trustee's assessment to income tax under section 9 of that Act,

(in addition to the person or trustee's income tax liability calculated in accordance with Chapter 3 of Part 2 (calculation of income tax liability)).

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 18 — Other regimes involving the deduction of income tax at source

Visiting performers

Overview of sections 966 to 970

965

(1) Sections 966 to 970 make provision for the payment of sums representing income tax to the Commissioners for Her Majesty's Revenue and Customs where certain payments or transfers are made in connection with activities performed in the United Kingdom by non-UK resident entertainers, sportsmen and sportswomen.

(2) See also—

section 1309 of CTA 2009 (entertainers and sportsmen) which makes provision in relation to such payments or transfers for the purposes of corporation tax,

Chapter 8 of Part 2 of ITEPA 2003 (application of provisions to workers under arrangements made by intermediaries), in particular section 48(2) (exclusions from the scope of the Chapter), and

sections 13 and 14 of ITTOIA 2005 (trades and trade profits: visiting performers).

Duty to deduct and account for sums representing income tax

966

(1) This section applies if—

(a) an entertainer, sportsman or sportswoman of a prescribed description (“a performer”) who is non-UK resident for a tax year performs a relevant activity in the United Kingdom in the tax year, and

(b) a payment or transfer connected with the relevant activity is made.

(2) It does not matter—

(a) whether the payment or transfer is made to the performer or anyone else, or

(b) when the payment or transfer is made.

(3) If a payment within subsection (1)(b) is made the person who makes the payment must, on making it, deduct from it a sum representing income tax and account to the Commissioners for Her Majesty's Revenue and Customs for the sum.

(4) If a transfer within subsection (1)(b) is made the person who makes the transfer must account to the Commissioners for Her Majesty's Revenue and Customs for a sum representing income tax.

(5) See section 967 as to the calculation of the sums representing income tax mentioned in subsections (3) and (4).

(6) This section does not apply to payments or transfers of such a kind as may be prescribed.

(7) In this section—

(a) “relevant activity” means an activity of a prescribed description, and

(b) a payment or transfer is connected with a relevant activity if it has a connection of a prescribed kind with that activity.

Calculation of sums representing income tax

967

(1) The sums representing income tax mentioned in section 966(3) and (4) are to be calculated in accordance with prescribed rules.

(2) But the sums must not exceed the relevant proportion of the payment concerned or of the value of what is transferred.

“Relevant proportion” means a proportion equal to the basic rate of income tax for the tax year in which the payment or transfer is made.

(3) Regulations made by the Treasury may provide, in relation to a transfer to which section 966 applies, that for the purposes of the Tax Acts the value of what is transferred is to be calculated in accordance with prescribed rules.

(4) In particular, rules may include provision—

(a) for the calculation of an amount representing the actual value of what is transferred,

(b) for that amount to be treated as a net amount corresponding to a gross amount from which income tax at the basic rate has been deducted, and

Treatment of sums representing income tax

968

(1) This section applies if, in accordance with section 966(3) or (4), a person pays a sum to the Commissioners for Her Majesty's Revenue and Customs.

(2) The sum is treated as paid on account of a liability of another person to income tax or corporation tax.

(3) The liability and the other person are to be found in accordance with prescribed rules.

(4) If the sum exceeds the liability concerned, the Commissioners must pay so much of the sum as is appropriate to the other person.

(5) If no liability is found, the Commissioners must pay the sum to the recipient of the relevant payment or transfer.

(6) The relevant payment or transfer is the payment or transfer—

(a) to which section 966 applies, and

(b) which gave rise to the payment of the sum.

(7) A reference to a sum in this section does not include anything representing interest.

Regulations

969

(1) The Treasury may by regulations—

(a) make provision enabling the Commissioners for Her Majesty's Revenue and Customs to serve notices requiring persons who make payments or transfers to which section 966 applies to give them prescribed information in respect of such payments or transfers,

(b) make provision requiring persons who make payments or transfers to which section 966 applies to make, at prescribed times and for prescribed periods, returns to the Commissioners containing prescribed information about payments or transfers and the income tax for which those persons are accountable in respect of them,

(c) make provision for the collection and recovery of such income tax, for assessments and claims to be made in respect of it, and for the payment of interest on it, and

(d) adapt, or modify the effect of, any enactment relating to income tax for the purpose of making any provision mentioned in paragraphs (a) to (c).

(2) The Treasury may also by regulations make provision generally for giving effect to this section and sections 966 to 968 (including different provision for different cases or descriptions of case).

Supplementary

970

(1) For the purposes of the Tax Acts a payment to which section 966 applies is treated as if it were not reduced by the deduction of a sum representing income tax under that section.

(2) An officer of Revenue and Customs may disclose, to any person who appears to the officer to have an interest in the matter, information relevant to determining whether section 966 applies to a payment or transfer.

(3) An officer is not precluded from doing so by any obligation as to secrecy imposed by statute or otherwise.

(4) In this section and sections 966 to 969—

(a) references to a payment include references to a payment by way of loan of money, and

(b) references to a transfer do not include references to a transfer of money but, subject to that, include references to—

(i) a temporary transfer (as by way of loan), and

(ii) a transfer of a right (whether or not a right to receive money).

(5) In sections 966 to 969 “prescribed” means prescribed by regulations made by the Treasury.

Non-resident landlords

Income tax due in respect of income of non-resident landlords

971

(1) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision for—

(a) the collection, from non-resident landlord representatives of a prescribed description, of prescribed amounts of income tax in respect of non-resident landlord income, and

(b) the assessment and recovery of the income tax on or from such persons.

(2) “Non-resident landlord income” means income of a person whose usual place of abode is outside the United Kingdom (“the non-resident”) and which is or may become chargeable as the profits of a UK property business under Chapter 3 of Part 3 of ITTOIA 2005 or Chapter 3 of Part 4 of CTA 2009.

(3) “Non-resident landlord representative” means—

(a) a person by whom any sums are payable to the non-resident which are to be treated as receipts of a UK property business (within the meaning of Chapter 2 of Part 3 of ITTOIA 2005 or Chapter 2 of Part 4 of CTA 2009) carried on by the non-resident, or

(b) a person who acts on behalf of the non-resident in connection with the management or administration of any such business.

(4) A non-resident landlord representative who must pay prescribed amounts of income tax to the Commissioners for Her Majesty's Revenue and Customs under regulations under this section is entitled—

(a) to be indemnified by the non-resident for all such payments, and

(b) to retain out of any sums otherwise due from the representative to the non-resident, or received by the representative on behalf of the non-resident, sums representing income tax sufficient for meeting any liabilities under the regulations to make such payments.

(5) Subsection (4)(b) applies whether the liability is one which the representative has discharged or to which the representative is subject.

Regulations under section 971

972

(1) Regulations under section 971 may, in particular, include all or any of the following provisions—

(a) provision for the amount of any income tax in respect of non-resident landlord income, which is to be paid to the Commissioners for Her Majesty's Revenue and Customs, to be calculated by reference to prescribed factors,

(b) provision for the determination in accordance with the regulations of the period for which, the circumstances in which and the times at which any payments are to be made to the Commissioners,

(c) provision for requiring the payment of interest on amounts which are not paid to the Commissioners at the times required under the regulations,

(d) provision as to the certificates to be given in prescribed circumstances to the non-resident by a non-resident landlord representative, and as to the particulars to be included in any such certificate,

(e) provision for the making of repayments of income tax to the non-resident and for such repayments to be made in prescribed cases to non-resident landlord representatives,

(f) provision for the payment of interest by the Commissioners on sums repaid under the regulations,

(g) provision for the rights and obligations arising under the regulations to depend on the giving of such notices and the making of such claims and determinations as may be prescribed,

(h) provision for the making and determination of applications for requirements of the regulations not to apply in certain cases, and for the variation or revocation, in prescribed cases, of the determinations made on such applications,

(i) provision for appeals with respect to questions arising under the regulations,

(j) provision requiring non-resident landlord representatives within section 971(3)(b) who are of a prescribed description to register with the Commissioners,

(k) provision requiring persons registered with the Commissioners and other non-resident landlord representatives of a prescribed description to make returns and supply prescribed information to the Commissioners and to make available prescribed books, documents and other records for inspection on behalf of the Commissioners,

(l) provision for the partnership, as such, to be treated as the non-resident landlord representative if a liability to make a payment under the regulations arises from amounts payable or things done in the course of a business carried on by persons in partnership, and

(m) provision which, in relation to payments of income tax to be made by virtue of section 971 or to sums retained in respect of such payments, applies (with or without modifications) any enactment or subordinate legislation having effect apart from section 971 with respect to cases in which tax is or is treated as deducted from any income.

(2) Interest required to be paid by regulations under section 971 is to be paid without deduction of a sum representing income tax and is not to be taken into account in calculating any income, profits or losses for any tax purposes.

(3) Regulations under section 971 may—

(a) make different provision for different cases, and

(b) contain incidental, supplemental, consequential and transitional provision and savings.

(4) Provision made by virtue of subsection (3)(b) may, in particular, in connection with any other provision made by regulations under section 971, modify the operation in any case of section 59A of TMA 1970 (payments on account of income tax).

(5) In this section and section 971 “prescribed” means prescribed by, or determined by an officer of Revenue and Customs in accordance with, regulations made by the Commissioners for Her Majesty's Revenue and Customs under section 971.

(6) See section 548(7) of CTA 2010, which prevents certain distributions of Real Estate Investment Trusts being non-resident landlord income for the purposes of regulations under section 971.

Real Estate Investment Trusts

Income tax due in respect of distributions

973

(1) The Treasury may make regulations providing for the assessment, collection and recovery of income tax where—

(a) a distribution to which subsection (2) or (3) applies is made, and

(b) tax is or may become chargeable in respect of the distribution (whether by virtue of section 548(5) or (6) of CTA 2010 (distributions: liability to tax) or otherwise).

(2) This subsection applies to a distribution if—

(a) it is made by a company UK REIT, and

(b) it is a distribution of profits or gains (or of both) of the company's property rental business.

(3) This subsection applies to a distribution if—

(a) it is made by the principal company of a group UK REIT, and

(b) it is a distribution of amounts shown in the financial statement under section 532(2)(a) of CTA 2010 (statement of group's property rental business) as—

(i) profits or gains (or both) of UK members of the group, or

(ii) profits or gains (or both) of UK property rental business of non-UK members of the group.

(3A) In this section, section 974 and any regulations under this section, “distribution” is to be read in accordance with section 554A of CTA 2010 (meaning of “distribution”).

(3B) Section 599A of CTA 2010 (amount of distribution consisting of share capital issued in lieu of cash dividend) applies for the purposes of this section, section 974 and any regulations under this section as it applies for the purposes of Part 12 of that Act (Real Estate Investment Trusts).

(4) In this section—

“company UK REIT” and “group UK REIT” have the same meaning as in Part 12 of CTA 2010 (see sections 523(5) and 524(5) of that Act),

“group” and “principal company” have the same meaning as in Part 12 of CTA 2010 (see section 606 of that Act), and

“property rental business” and “UK property rental business” have the same meaning as in Part 12 of CTA 2010 (see sections 519 and 520 of that Act).

(5) References in this section to a UK or non-UK company are to be read in accordance with Part 12 of CTA 2010 (see section 521 of that Act).

(6) In this section “gains” includes chargeable gains.

(7) In relation to references to profits of property rental business, see section 549A of CTA 2010.

Regulations under section 973

974

(1) Regulations under section 973 may, in particular—

(a) require a company to deduct sums representing income tax at the basic rate before payment of distributions,

(b) specify classes of shareholder to whom distributions may be made without deduction of such sums,

(d) require a company to account for income tax equal to the sums deducted,

(e) apply an enactment (with or without modification) in respect of cases where a sum representing income tax is deducted or treated as deducted from income,

(f) specify the time at which a distribution is to be treated as made by a company,

(g) specify periods in respect of which payments of income tax are to be made,

(h) specify times at which payments of income tax are to be made,

(i) make provision about the making of claims and determinations in respect of over-payment or under-payment (which may include provision for appeals),

(j) include provision requiring the payment of interest in respect of late payments of income tax (which may—

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