Commentary on Sections Overview Overview
1703.This Chapter is concerned with the treatment of manufactured payments, in particular:
	the taxability of manufactured payments in the hands of the recipient (or, if different, the owner);
	tax relief for the payer of manufactured payments; and
	taxes management.
1704.The detailed structure of the Chapter is as follows:
	Section 572 - overview of the Chapter;
	Sections 573 to 577 - manufactured dividends on UK shares;
	Sections 578 to 580 - manufactured interest on UK securities;
	Sections 581 and 582 - manufactured overseas dividends (MODs);
	Sections 583 to 585 - special cases;
	Sections 586 to 588 - general regulation-making powers;
	Sections 589 to 591 - minor definitions which apply to this Chapter.
1705.Manufactured payments will normally arise under stock loan and repo agreements, but they may also occur if there has been a short sale of securities. A short sale is a sale of securities by someone who does not own the securities at the time of selling them, so is required to acquire them at a time between the date of the bargain and the date when the seller has to deliver them to the purchaser. Dealers may sell short for a variety of reasons. For example, dealers may expect the market price of the securities to fall between the time of the sale bargain and the time at which they expect to buy and so may choose to delay acquiring securities.
1706.A consequence of short selling can be that the dealer sells the securities cum-div (with dividend) but buys them ex-div (without dividend – leaving the right to the next dividend with the seller). The dealer pays the buyer a sum as compensation for the dividend that the buyer expected to receive, but did not. This sum is a manufactured payment.
1707.Many of the detailed rules, especially as regards MODs, are laid down in regulations. The Act does not rewrite any of these regulations.