Citation, commencement and effect

1. —(1) These Regulations may be cited as the Income Tax (Manufactured Overseas Dividends) (Amendment) Regulations 2011 and come into force on 11th August 2011.

(2) These Regulations have effect in relation to manufactured overseas dividends paid or treated as paid on or after that day.

Amendments to the Income Tax (Manufactured Overseas Dividends) Regulations 1993

2.The Income Tax (Manufactured Overseas Dividends) Regulations 1993( 3 ) are amended as follows.

Amendment of regulation 2 (interpretation)

3. —(1) In regulation 2 (interpretation), amend paragraph (1) as follows.

(2) After the definition of “collecting agent”( 4 ) insert—

“ “foreign permanent establishment payment” means a payment made by a company in the course of a trade carried on through a permanent establishment in a territory outside the United Kingdom where section 18A of the Corporation Tax Act 2009 ( 5 ) has effect in relation to the company for the accounting period in which the payment is made;

“foreign permanent establishment receipt” means a receipt by a company for the purposes of a trade carried on by the company through a permanent establishment in a territory outside the United Kingdom where section 18A of the Corporation Tax Act 2009 has effect in relation to the company for the accounting period in which the payment is received; ” .

(3) For the definition of “United Kingdom recipient”( 6 ) substitute—

“ “United Kingdom recipient” has the meaning given in section 918(5) and (5A) of the Income Tax Act 2007 ( 7 ) . ” .

Amendment of regulation 4 (tax treatment of approved manufactured overseas dividends paid to approved United Kingdom intermediaries or approved United Kingdom collecting agents)

4. In regulation 4 (tax treatment of approved manufactured overseas dividends paid to approved United Kingdom intermediaries or approved United Kingdom collecting agents)( 8 ), in paragraph (2)—

(a) at the end of paragraph (a) omit “and”, and

(b) at the end of paragraph (b) insert—

“ , and

(c) the receipt of the manufactured overseas dividend by the approved United Kingdom intermediary or approved United Kingdom collecting agent is not a foreign permanent establishment receipt. ” .

Amendment of regulation 5 (tax treatment of approved manufactured overseas dividends paid to persons resident outside the United Kingdom)

5. In regulation 5 (tax treatment of approved manufactured overseas dividends paid to persons resident outside the United Kingdom), in paragraph (2)(b)( 9 )—

(a) at the end of sub-paragraph (ii) omit “and”, and

(b) at the end of sub-paragraph (iii) insert—

“ , and

(iv) none of the payments are foreign permanent establishment payments. ” .

Amendment of regulation 5A (chains of payments where last payment made to, or for the benefit of, registered pension scheme or is linked solely to pension business)

6. —(1) Amend regulation 5A (chains of payments where last payment made to, or for the benefit of, registered pension scheme or is linked solely to pension business)( 10 ) as follows.

(2) In paragraph (1)(b) for “D” substitute “E”.

(3) After paragraph (5) insert—

“ (5A) Condition E is that none of the payments are foreign permanent establishment payments. ” .

Amendment of regulation 7 (disapplication of paragraph 4(3) of Schedule 23A)

7. In regulation 7 (disapplication of paragraph 4(3) of Schedule 23A), in paragraph (2)—

(a) in sub-paragraph (c) after “the United Kingdom” insert “and receipt of the manufactured overseas dividend by the person beneficially entitled to it would be otherwise than in the course of a trade carried on through a branch or agency in the United Kingdom”, and

(b) after sub-paragraph (c) insert—

“ (ca) is an approved United Kingdom collecting agent and receipt of the manufactured overseas dividend by the person beneficially entitled to it would be a foreign permanent establishment receipt, or ” .

Amendment of regulation 9 (offsetting of tax by overseas dividend manufacturers)

8. In regulation 9 (offsetting of tax by overseas dividend manufacturers), in paragraph (1A)( 11 )—

(a) in sub-paragraph (a) at the end insert “otherwise than as foreign permanent establishment receipts”, and

(b) in sub-paragraph (b) at the end insert “otherwise than as foreign permanent establishment receipts”.

Amendment of regulation 9A (offsetting of tax by overseas dividend manufacturers who are not United Kingdom intermediaries)

9. In regulation 9A (offsetting of tax by overseas dividend manufacturers who are not United Kingdom intermediaries)( 12 ), in paragraph (1) after “period” in the second place it occurs insert “otherwise than as a foreign permanent establishment receipt”.

Amendment of regulation 10 (matching of dividends and manufactured overseas dividends)

10. In regulation 10 (matching of dividends and manufactured overseas dividends), after paragraph (1) insert—

“ (1A) But the following cannot be matched under paragraph (1)—

(a) overseas dividends received as foreign permanent establishment receipts,

(b) manufactured overseas dividends received as foreign permanent establishment receipts, and

(c) manufactured overseas dividends paid as foreign permanent establishment payments. ” .