ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change is in taxpayers’ favour in principle. But it is expected to have no practical effect as it is in line with current practice. Change 137: Deduction of tax: payments of UK public revenue dividends: application for deduction of tax: section 895
This change extends the definition of “registered” to include securities which are “recorded” in the books of the Registrar of Government Stock, in order to provide legislative support for deduction at source applications under section 895 in respect of UK public revenue dividends on securities held in CREST.
Section 50(2) of ICTA provides that holders of any registered securities may apply to have income tax deducted at source. Section 50(7) of ICTA defines “registered” as meaning entered in the register of the Registrar of Government Stock in accordance with the regulations under section 47(1)(b) of FA 1942 (see regulation 3 of the Government Stock Regulations 2004 (SI 2004/1611)).
Securities which are held in CREST are not entered in the register of the Registrar of Government Stock. The Registrar of Government Stock only maintains a record of entries made in CREST’s register. This means that, strictly, UK public revenue dividends on securities held in CREST cannot be the subject of an application for deduction at source as the securities are not “registered” (ie they are not entered on the register of the Registrar of Government Stock).
But current practice is that UK public revenue dividends on securities held in CREST are paid net of tax on application. In order to legislate for this, the definition of “registered” has been extended to include securities entered in a register maintained in accordance with regulations made under section 207 of the Companies Act 1989. Regulation 21 of the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended), introduced under that section, requires the Registrar of Government Stock to maintain a record of entries made in CREST’s register.