Tax elected funds (TEFs): provisions for providing tax information to participants: basic rules for sending tax information to participants
Tax information sent by companies to their shareholders
Under ICTA88/S234A where dividends or interest are distributed by a company to its shareholders, a written statement must be sent (by post or electronically) to the shareholder. These rules apply to authorised investment funds as they are treated as companies (see CTM48210). The information that must be contained in the written statement is set out below.
A written statement made under section 234A(6) ICTA 1988
In the case of a payment of interest which is not a qualifying distribution or part of a qualifying distribution (as explained in CTM15120), a written statement must contain the following information:
- the gross amount which, after deduction of the income tax appropriate to the interest, corresponds to the net amount actually paid,
- the rate and the amount of income tax appropriate to such gross amount,
- the net amount actually paid, and
- the date of the payment.
A written statement made under section 234A(7) ICTA 1988
In the case of a payment of dividend or interest which is a qualifying distribution or part of a qualifying distribution (see CTM15120), a written statement must contain the following information:
- the amount of the dividend or interest paid
- the date of the payment, and
- the amount of the tax credit to which a person is entitled in respect of the dividend or interest, or to which a person would be so entitled if he had the right to a tax credit in respect of the divided or interest.
Delivering information electronically
In 2003 further provisions to ICTA88/S234A were introduced under SI2003/3143 to allow statutory dividend vouchers and tax deduction certificates to be sent by electronic means. The regulations do not prescribe the methods of electronic communication that must be used, but possibilities include sending PDF files by e-mail or making the voucher or certificate available on a secure website for the recipient to download.
Sending such information electronically is subject to three conditions, which are:
- the company has indicated to the recipient that it intends to use electronic communications for the purposes of delivering a statement under section 234A;
- the recipient consents to this form of communication; and
- the statement is delivered in an electronic format that can be stored , which permits paper copy of the information contained in the statement to be printed and is designed to prevent alteration of contents.
From the 1 September 2009, these regulations have been extended by virtue of SI2009/2050 so that where a company pays distributions of dividends or interest directly into a recipient’s bank or building society account, they will be able to send the appropriate statement (to either the bank or building society concerned or the person holding the account) by electronic means, as described above.