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 130: Deduction of tax: deposit-takers and building societies: declarations of non-UK residence: sections 858, 859, 860 and 861
This change aligns the rules about declarations as between the deposit-taker and building society regimes, in line with practice, so that in all cases a declaration of non-UK residence in the prescribed or authorised format (which may or may not be in writing) will be required in order for a gross payment to be made.
Section 481(5)(k) of ICTA requires deposit-takers to have received a written declaration from an “appropriate person” confirming that the individual, deceased person or trustees are (or, in the case of a deceased person, was) non-UK resident before a gross payment can be made.
The declaration needs:
	to be in a prescribed or authorised format and contain an undertaking to notify the deposit-taker if circumstances change (see section 482(2) of ICTA); and
	to contain the names and addresses of the individuals or partners to whom the declaration applies (see section 482(2A) of ICTA).
These latter conditions are not prerequisites for the payment to be made gross. But a penalty can arise if they are not met (see section 98 of TMA).
But current practice is that the payment will only be made gross where a declaration is made in the prescribed or authorised format which contains all the above mentioned information.
For building societies the position is slightly different. Under the Income Tax (Building Societies) (Dividends and Interest) Regulations 1990 (SI 1990/2231) (the building society regulations) building societies cannot make gross payments unless they have received a non-UK resident declaration (which need not be in writing) from an “appropriate person” which must contain an undertaking to notify the building society if there is a change in circumstances (regulation 11(1) to (2AB)).
But it is not a prerequisite for gross payment that the declaration contains the names and addresses of the individuals or partners concerned (regulation 11(2AC) of the building society regulations). Nor is it necessary for the declaration to be in a prescribed or authorised format (regulation 11(3)). But a penalty can arise if these conditions are not met (see section 98 of TMA).
Again, current practice is that the payment will only be made gross where a non-UK resident declaration is made in the prescribed or authorised format and it contains all the above mentioned information.
In order to align both the deposit-taker and building society regimes with current practice a number of steps have been taken.
Firstly, the sections require in all cases a declaration of non-UK residence in the prescribed or authorised format (which may or may not be in writing) in order for a gross payment to be made.
The requirement that the declaration for deposit-takers be in writing (section 481(5)(k) of ICTA) has, therefore, not been reproduced, as it is unnecessary if the declaration is in a prescribed or authorised format. Further, the requirement, in section 482(2) of ICTA, that the declaration must contain such information as the Commissioners for Her Majesty’s Revenue and Customs may reasonably require is in line with the deposit-taker rules, but goes beyond the explicit terms of regulation 11(3) of the building society regulations.
Second, declarations will need to include an undertaking (except in relation to deceased persons), and, in the case of the “individual interest condition” in section 856(3) or the “Scottish partnership condition” in section 856(4), it will require the names and addresses of the individuals concerned.