Income Tax Act 2007 section 920

Foreign payers of manufactured interest: the reverse charge

Section 920 requires UK recipients of manufactured interest from non-UK payers to account for and pay income tax that would otherwise have been deducted at source had the payer been UK resident.

• Where manufactured interest is paid by a non-UK resident who is not trading through a UK branch or agency, the obligation to account for income tax shifts to the recipient — this is known as the "reverse charge".
• The recipient must account for and pay income tax equal to the amount the foreign payer would have been required to deduct at source under section 919 had they been UK resident.
• If the payer would not have been required to deduct any tax under section 919 (for example, because an exemption applied), the recipient has no obligation to account for or pay any tax.
• The mechanism for collecting the tax from recipients — whether companies or individuals, UK resident or not — is set out in secondary legislation (SI 1997/992), as enabled by section 586.