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HMRC internal manual

International Manual

HM Revenue & Customs
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DT applications and claims: manufactured payments

Manufactured Overseas Dividends and Interest

Where a non-UK company issued the original stock the market maker must treat the manufactured payment in exactly the same way as the original amount. If the original payment would have suffered overseas withholding tax so must the manufactured payment. This is called “Relevant Overseas Withholding Tax” (RWT).

RWT is paid in addition to any UK tax that may have been paid on the income. Claims may be made to CAR Residency under the terms of a double taxation agreement for payment of RWT. Such claims will normally be made under the terms of the article in the DTA that deals with ‘Other income’ - see INTM344500.

Special tax certificates ought to be used by the banks etc that manufacture payments. These vouchers should refer to Regulation 15 of SI1993/2004. In the case of foreign dividends and interest the vouchers should also use the words ‘Relevant Withholding Tax’.

It is possible for manufactured payments to be used as a method of avoiding UK tax. LBS Financial London wishes to see all such claims before they are paid. Please refer all claims for payment of relevant withholding tax to Technical Advice Group before you take any other action.

For manufactured overseas dividends paid on or after 1 November 2003, no RWT will be paid where a manufactured overseas dividend is paid

  • by a UK resident (or by a non-resident in the course of a trade carried on in the UK through a permanent establishment)
  • to or for the benefit of a person beneficially entitled to the MOD who is not a UK recipient. A UK recipient is defined as a person who is either UK resident or who receives the MOD for the purposes of a trade carried on in the UK through a permanent establishment.

Accordingly there should be no claim for payments of RWT in respect of payments made after this date.