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 141: Deduction of tax: manufactured overseas dividends: periods for accounting for tax: section 925
This change brings the law into line with practice in relation to the periods by reference to which overseas dividend manufacturers may set off amounts of overseas tax against their United Kingdom tax liabilities.
Paragraph 4(7) of Schedule 23A to ICTA provides:
“Dividend manufacturing regulations may make provision for a person who, in any chargeable period, is an overseas dividend manufacturer to be entitled in prescribed circumstances to set off in accordance with the regulations and to the prescribed extent, amounts falling within paragraph (a) of sub-paragraph (7AA) below against the sums falling within paragraph (b) of that sub-paragraph, and to account to the Board for, or as the case may be, claim credit in respect of, the balance.”
Section 832(1) of ICTA defines “chargeable period” as an accounting period of a company or a year of assessment. It defines “year of assessment”, with reference to income tax, as a year for which such tax is granted by any Act granting income tax.
Section 925 rewrites paragraph 4(7) of Schedule 23A to ICTA in terms of a “prescribed period” rather than a “chargeable period”. This will enable the Treasury to make regulations about set-off in relation to a period other than a tax year if that is thought desirable. This flexibility is potentially beneficial to taxpayers, as it enables regulations to prescribe periods (such as periods of account) which will be to their administrative convenience.