HC Deb 13 March 2001 vol 364 cc932-3

349D.—(1) Where—

  1. (a) a payment is made by a company without an amount representing the income tax on the payment being deducted from the payment,
  2. (b) at the time the payment is made, the company reasonably believes that one of the conditions specified in section 349B is satisfied,
  3. (c) if the company did not so believe, tax would be deductible from the payment under section 349, and
  4. (d) neither of the conditions specified in section 349B is satisfied at the time the payment is made,

section 350 applies as if the payment were within section 349 (and Schedule 16 applies as if tax were deductible from the payment under section 349).

(2) In this section "company" includes a partnership of which any member is a company.".

(2) In section 98 of the Taxes Management Act 1970, after subsection (4) there shall be inserted—

"(4A) If—

  1. (a) a failure to comply with section 350(1) of, or Schedule 16 to, the principal Act arises from a person's failure to deliver an account, or show the amount, of a payment, and
  2. (b) the payment is within subsection (4B) below,

subsection (1) above shall have effect as if for "£300" there were substituted "£3,000" and as if for "£60" there were substituted "£600".

(4B) A payment is within this subsection if—

  1. (a) the payment is made by a company without an amount representing the income tax on the payment being deducted from the payment,
  2. (b) at the time the payment is made, the company—
    1. (i) does not believe that either of the conditions specified in section 349B of the principal Act is satisfied, or
    2. (ii) where it believes that either of those conditions is satisfied, could not reasonably so believe,
  3. (c) the payment is one from which tax is deductible under section 349 of the principal Act unless the company reasonably believes that one of those conditions is satisfied, and
  4. (d) neither of those conditions is satisfied at the time the payment is made.

(4C) In subsection (4B) above "company" includes a partnership of which any member is a company.".

(3) In section 338(4) of the Income and Corporation Taxes Act 1988, after paragraph (a) there shall be inserted— (aa) the person beneficially entitled to the income in respect of which the payment is made is a company not resident in the United Kingdom ("the non-resident company"), the non-resident company carries on a trade in the United Kingdom through a branch or agency and the payment falls to be brought into account in computing the chargeable profits (within the meaning given by section 11(2)) of the non-resident company, or".

(4) This Resolution applies to payments made on or after 1st April 2001.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.