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HMRC internal manual

Company Taxation Manual

Authorised investment funds (AIFs): gross payment of interest distributions: residence condition - non-residence declarations

If, on a distribution date, the fund (the open-ended investment company or the trustees of the authorised unit trust) holds a valid declaration made by a participant described at CTM48635 it must pay interest distributions without deducting tax. Declarations received after distribution dates cannot be applied retrospectively and funds must not make any adjustment for the tax deducted in respect of distributions already paid.

On receipt of a declaration the fund must satisfy itself that it has no information to suggest that anything in it is, or may be, incorrect. If such information is held, tax must be deducted from any interest distribution made to the unit holder concerned, unless the error is minor in nature and has no bearing on the not ordinarily resident status of the participant.

The declaration contains an undertaking that the unit holder will notify the fund if he or she becomes ordinarily resident in the UK. If the fund receives such a notification it must deduct tax from all interest distributions made on or after the date on which it received the notification.

A fund may receive other information that gives it reason to believe that a declaration has ceased to be valid or was not valid at the time that it was made. Where a declaration is no longer valid the fund must deduct tax from all interest distributions made on or after the date on which that information was obtained. If it is not clear whether declarations have become invalid, the fund may make enquiries in order to satisfy itself that the declaration remains valid. If the fund is unable to verify the declaration within ninety days of the initial enquiry then tax should be deducted from future distributions. The fund may only pay interest distributions without deducting tax following the enquiry if it has satisfied itself that the declarations remain valid.

The form is available for download from the internet via the HMRC website ().