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 but not in practice) only administrative matters. Change 147: Deduction of tax: removal of charge to tax: sections 939, 946, 963, 964 and 971
This change removes the charging provision in sections 42A(1), 350(1) and 582 of ICTA, to bring this legislation into line with the approach taken in other legislation about collection of income tax deducted at source. So a person will not be chargeable in relation to tax to be accounted for under Part 15 of this Act.
Section 42A(1) of ICTA allows the Commissioners for Her Majesty’s Revenue and Customs to make regulations for the “charging, assessment, collection and recovery” of prescribed amounts which may become chargeable under Schedule A or as the profits of a UK property business.
Section 350(1) of ICTA provides that the person by or through whom certain payments are made (from which sums representing income tax are required to be deducted) shall be “assessable and chargeable” with income tax on the payment. And the idea of the payer being chargeable flows through into Schedule 16 to ICTA, as applied by section 350(4) of ICTA for certain payments caught by section 349 of that Act.
Section 582 of ICTA applies the section 350(1) charge to the special case of funding bonds, where instead of making a deduction the issuer of the bonds retains enough bonds to cover the sum representing income tax.
Other legislation concerned with deduction at source does not involve the payer being chargeable. Examples include PAYE legislation, and the rules for deposit-takers and building societies (sections 477A and 480A of ICTA) which apply Schedule 16 to ICTA directly rather than through section 350 of that Act.
This change aligns the sections rewriting sections 42A, 350(1) and 582 of ICTA with those rewriting other legislation which does not involve the idea of the payer being chargeable, rather than retaining that idea.
This, in particular, gives greater clarity to the distinction between:
	income tax charged on persons in their own right (on their own income); and
	income tax paid under deduction of tax at source provisions (where income tax is ultimately borne by the persons for whom the payments constitute income).