ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change has no implications for the amount of tax paid, who pays it or when. It affects (in principle and in practice) only administrative matters. Change 133: Deduction of tax: deposit-takers and building societies: qualifying deposit rights: sections 864 and 889
This change omits the provisions about deposit rights in sections 349(3A), 349(4), 477A(1A) and (10) and 481(5A) of ICTA, as these are obsolete.
These provisions were inserted by Schedule 8 to F(No 2)A 1992, alongside the insertion of section 56A of ICTA in order to pave the way for the introduction of dematerialised transactions.
Section 56A supplemented section 56 of ICTA, to ensure that the charge to tax on income from the disposal of deposits would embrace income from the disposal of such deposit rights. And the provisions inserted into sections 349, 477A and 481 extended the exceptions from the duty to deduct which applied to qualifying certificates of deposit to deposit rights satisfying the relevant qualifying conditions.
The legislation in F(No 2)A 1992 was timed to coincide with the intended introduction of TAURUS (Transfer and Automated Registration of Uncertificated Stock). But in 1993 TAURUS was abandoned and so this legislation was never used.
Instead a new electronic settlement system (CREST) was proposed and began operation in 1996, under the terms of the Uncertificated Securities Regulations 1995 (SI 1995/3272) (now replaced by the Uncertificated Securities Regulations 2001 (SI 2001/3755)). In 2003, specific regulations were made to cater for electronic settlement of dematerialised rights in deposits (the Uncertificated Securities (Amendment) (Eligible Debt Securities) Regulations (SI 2003/1633)).
The references to uncertificated eligible debt security units in SI 2003/1633 were incorporated directly into the relevant provisions of ICTA by ITTOIA. These references have been rewritten in this Act as “qualifying uncertificated eligible debt security units” (see sections 864, 889(3)(b) and 986).
The references to deposit rights in sections 349(3A), 349(4), 477A(1A) and (10) and section 481(5A) of ICTA are therefore obsolete and have been omitted. And, accordingly, regulation 4(1)(j) of the Income Tax (Building Societies) (Dividends and Interest) Regulations 1990 (SI 1990/2231) is not rewritten.