What types of payments does Income Tax Act 2007 section 963 apply to?

Section 963 applies to payments from which income tax must be deducted at source, including yearly interest, building society securities, UK public revenue dividends, annual payments, patent royalties, other royalty payments, patent sale proceeds paid to non-UK residents, chargeable payments connected with exempt distributions, and payments to non-UK residents under anti-avoidance directions.

Who is required to report payments under section 963 of the Income Tax Act 2007?

Any person other than a UK resident company who is required to deduct income tax at source from specified payments must report the payment to an officer of HMRC without delay. There is no prescribed form for this report. The obligation ensures HMRC is promptly notified so it can track and collect the tax due.

Can HMRC raise an assessment under section 963 if a payer fails to deduct tax?

Yes. Under section 963, an HMRC officer may raise a formal income tax assessment on the payer for an amount equal to the tax that should have been deducted at source. This allows HMRC to pursue the payer directly using all its standard collection and recovery powers under the Income Tax Acts.

How does section 963 interact with the general income tax collection rules?

All standard provisions of the Income Tax Acts relating to persons chargeable, assessments, and the collection and recovery of income tax apply to assessments made under section 963. This gives HMRC the full range of normal enforcement powers unless those provisions are expressly or impliedly excluded by other legislation.

Income Tax Act 2007 section 963

Collection of income tax on certain payments by other persons

Section 963 sets out how HMRC collects income tax that certain payers (other than UK resident companies) are required to deduct at source from specified types of payment, including yearly interest, royalties, annual payments and other categories.

When a person (other than a UK resident company, or in some cases any company) is required to deduct income tax at source from certain payments — such as yearly interest, building society securities, UK public revenue dividends, annual payments, patent royalties, other royalty payments, patent sale proceeds paid to non-UK residents, chargeable payments linked to exempt distributions, or payments to non-UK residents under anti-avoidance directions — this section governs how that tax is collected
The person who deducts the tax must report the payment to an officer of HMRC without delay — there is no prescribed form for this report
An HMRC officer may raise an income tax assessment on the payer for an amount equal to the sum that should have been deducted
The normal Income Tax Acts provisions for charging, assessing, collecting and recovering income tax apply to assessments made under this section, unless expressly or impliedly excluded

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