Income Tax Act 2007 section 922

Manufactured overseas dividends: payments by UK residents etc.

Section 922 requires a person paying a manufactured overseas dividend (MOD) to deduct income tax from the gross amount of the payment, where the payer is UK resident or operating through a UK branch or agency.

• When a UK resident (or a person trading through a UK branch or agency) pays a manufactured overseas dividend, they must deduct income tax from the gross amount of that payment.
• The amount deducted must equal the relevant withholding tax that would apply to the gross amount of the manufactured overseas dividend.
• This obligation does not benefit from the exemption that applies to payments between companies — the inter-company exception from the duty to deduct tax does not cover manufactured overseas dividends.
• Detailed rules on collecting the tax deducted and on providing tax vouchers are set out in separate regulations, with the power to make such regulations found in sections 586 and 925.