Finance Act 1996

159 Manufactured payments, repos, etc.U.K.

(1)Sections 729, 737A(2)(b) and 786(4) of the Taxes Act 1988 (provisions applying to sale and repurchase agreements) shall cease to have effect except in relation to cases where the initial agreement to sell or transfer the securities or other property was made before the appointed day.

[F1(2)In section 737 of that Act—

(a)in subsection (5) (manufactured dividends paid to UK residents by non-residents), for the words from “a person resident in the United Kingdom” to “the United Kingdom recipient shall” there shall be substituted “ a United Kingdom recipient, that recipient shall ”; and

(b)after that subsection there shall be inserted the following subsection—

“(5AAA)For the purposes of subsection (5) above a person who receives a manufactured dividend is a United Kingdom recipient if—

(a)he is resident in the United Kingdom; or

(b)he is not so resident but receives that dividend for the purposes of a trade carried on through a branch or agency in the United Kingdom.”

F1(3)In section 737C of that Act (deemed manufactured payments), the following subsection shall be inserted after subsection (11A) in relation to cases where the initial agreement to sell the securities is made on or after the appointed day, that is to say—

“(11B)The preceding provisions of this section shall have effect in cases where paragraph 2, 3 or 4 of Schedule 23A would apply by virtue of section 737A(5) but for paragraph 5 of that Schedule as they have effect in a case where the paragraph in question is not disapplied by paragraph 5; and where—

(a)the gross amount of the deemed manufactured interest, or

(b)the gross amount of the deemed manufactured overseas dividend,

falls to be calculated in such a case under subsection (8) or (11) above, it shall be so calculated by reference to the provisions of paragraph 3 or 4 of Schedule 23A that would have applied but for paragraph 5 of that Schedule.”]

F2(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In sub-paragraph (1) of paragraph 8 of that Schedule (power to modify provisions of Schedule)—

F3(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F4(b)in the words after paragraph (b), for “paragraph 2, 3 or 4 above” there shall be substituted “ paragraphs 2 to 5 above ”.]

F5(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)Subsections (2), (4) and (5) above have effect—

(a)for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996; and

(b)for the purposes of income tax, in relation to the year 1996-97 and subsequent years of assessment.

(10)In this section “the appointed day” means such day as the Treasury may by order appoint, and different days may be appointed under this subsection for different purposes.