Commentary on Sections Part 10: Miscellaneous income Overview Section 975: Meaning of “foreign holdings” etc
2475.This section gives the meaning of “foreign holdings” and “dividend coupons”. It is based on section 18(3B), (3C), (3D) and (3E) of ICTA. The corresponding rule for income tax is in section 571 of ITTOIA.
2476.For reasons given above the extended definition of “dividends” to include interest or other annual payments has been omitted as part of the exclusion of coupons in respect of securities. It is considered that “dividends” alone in section 18(3D) of ICTA is sufficient to refer to any income from shares.
2477.The definition in subsection (1) of “foreign holdings” as shares outside the United Kingdom which are issued by or on behalf of a non-UK resident body of persons reflects the wording of section 18(3C) of ICTA. Section 18(3B) states that the references in Schedule D Cases IV and V to income arising from securities or possessions out of the UK are to be taken in the case of relevant foreign holdings as including the various categories of proceeds detailed under paragraphs (a) and (b). This is construed as meaning that where the securities or possessions are out of the United Kingdom and are relevant foreign holdings references to income from them include the proceeds under those paragraphs (but not in other cases). In other words there is no assumption of a complete overlap between securities or possessions out of the United Kingdom and relevant foreign holdings. Whether a security or possession is within Cases IV and V as a security or possession out of the United Kingdom may depend on a number of factors (see Westminster Bank Executor and Trustee Co (Channel Islands) Ltd v National Bank of Greece SA (1970), 46 TC 472 HL).