Tax elected funds (TEFs): provisions for providing tax information to participants: alternative rules for providing tax information to participants
Regulation 70 SI2006/964 as amended by regulation 25 SI2009/2036 prescribes an alternative way in which participants can be provided the tax information in a written statement (tax voucher).
The alternative provision (which is optional) allows a tax elected fund (TEF) to send to the participant (by post or electronically) less detailed information, that is ‘generic information’ that would ordinarily be sent on a tax voucher (see CTM48952), if the participant is provided access to the all the information that would be contained in the tax voucher by ‘electronic means’, or in the case where participants may not be able to access this information electronically, is provided with an ‘alternative method’ to access the information. This is explained below in more detail.
Under regulation 70(4)(a) SI2006/964 as amended by SI2009/2036, the generic information that must be sent by post or electronically (if electronically then this subject to the conditions set out in CTM48952) to participants is as follows:
- the gross amount of the distribution made to the participant (this should include any amount accumulated to the investor),
- the number and class of units held by the participant in respect of which the distribution is made,
- the net amount of the distribution per unit (if a gross share class then the gross amount of the distribution per unit),
- Whether any tax has been deducted or not,
- The date the distribution was made, and
- The percentage of the gross distribution attributable to the TEF distribution (dividend) and the percentage attributable to the TEF distribution (non-dividend).
- (The ‘gross amount’ of the distribution is the total of any dividend and non-dividend elements before any tax is deducted from the non-dividend element. It does not include the amount of the tax credit attaching to the dividend element.)
Access to an electronic means of information
Where generic information is sent by the TEF to its participants, under regulation 70(4)(b) SI2006/964 as amended by SI2009/2036, the TEF must provide electronically or otherwise a means of obtaining all the information required to complete a written statement set out in ICTA88/S234A (6) or (7) (see CTM48952).
The regulation is not prescriptive about the format this electronic means should take but an example of fulfilling this requirement would be where participants were directed to the TEF’s website (or one provided on its behalf) and a web calculator, which on inputting the generic information, would calculate the more specific information as shown below:
- The amount of the dividend and or interest paid
- The rate and the amount of any income tax deducted from the interest paid
- The net amount of interest paid
- 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
to ensure that the participant had electronic access to all the information contained in a written statement as set out in ICTA88/S234A (6) or (7) (see CTM48952).
It would be preferable for the electronic access to the information above to be as informative as possible and in particular to show clearly the entries to be made on an income tax return. For an example of the information that should be made accessible electronically and the type of information that could be shown to help an UK individual participant complete their tax return see CTM48954.
Access to an alternative method of information
Under regulation 70(4)(c) SI2006/964, as amended by SI2009/2036, the TEF must provide an alternative method of accessing information for participants who cannot access information electronically (perhaps because they have no internet access). Again, this is not prescribed for in the regulations but an example of satisfying this alternative method might be a customer information telephone line where this additional information was sent in writing on request.