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HMRC internal manual

Savings and Investment Manual

Deduction of tax: collection arrangements: deposit takers, building societies and companies

Payments by deposit takers, building societies and companies

Chapter 15 of Part 15 of ITA07 (S945 to S962) applies a common regime for the collection mechanism under which deposit takers, building societies and companies must account to HMRC for the tax deducted from payments of interest, etc.

This machinery was formerly set out in ICTA88/SCH16 (CTM35200 onwards - SAIM20000) and in the bank and building society regulations (SAIM9020). The regulations applicable to deposit takers and building societies, and the power to modify them, remain.

Inter-company payments

Payments made by UK companies to other UK companies (and local authorities, etc.) are exempt from the duty to deduct tax if they reasonably believe the payments concerned are ‘excepted payments’. CTM35200 onwards has more details (SAIM20000) with details of the time limits at CTM35160. The legislation was originally enacted in ICTA88/S349A to 349E, and is now in Chapter 11 of Part 15 ITA07.