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A draft of a proposed new statutory instrument containing a number of amendments to The Income Tax (Manufactured Overseas Dividends) Regulations 1993 (SI 1993/2004) was published by HMRC in September 2010.
The main change was the introduction of a new regulation to provide for a manufactured overseas dividend paid via a central counterparty to be treated as though it were made directly by the borrower to the lender.
In the original draft, the new regulation could apply only if the ‘first counterparty payer’ and ‘final counterparty recipient’ (the underlying borrower and lender) knew each other’s identities.
Respondents to the draft said they would like the regulation to accommodate anonymous trading.
A draft statutory instrument, The Income Tax (Manufactured Overseas Dividends) (Amendment No 2) Regulations 2011, has therefore been produced with provisions to allow this.
One of the additional provisions will apply to certain bilateral stock loans as well as to loans made via counterparties.
Currently, notices issued under regulation 5A(5) do not have to be in the form provided or in a form authorised by HMRC. Under the new regulations, such notices will have to be so provided or authorised.
Comments and queries should be sent by email, no later than 26 August 2011, to Geoff Heaton or Robin Blades.
