Explanatory note

These Regulations relate to certain payments of yearly interest by authorised unit trusts (“interest distributions”) which may be made without deduction of tax pursuant to sections 468M to 468P of the Income and Corporation Taxes Act 1988 (inserted by paragraph 2 of Schedule 14 to the Finance Act 1994) if at the time of the payment to the unit holder there exists a valid declaration to the effect that the unit holder is not ordinarily resident or, if a company, not resident in the United Kingdom. The Regulations first modify the application of sections 468O and 468P of the 1988 Act (residence conditions and residence declarations) in relation to interest distributions made to or received under a trust.econdly the Regulations make provision enabling the Board of Inland Revenue (“the Board”) to require authorised unit trusts to supply information and make records available for inspection in connection with residence declarations.

Regulation 1 provides for citation and commencement, and regulation 2 contains definitions.

Regulations 3 to 5 modify the application of sections 468O and 468P of the 1988 Act in relation to interest distributions made to or received under a trust, and have the effect that, in order for the interest distribution to be paid to the trust without deduction of tax, there has to be in existence a valid declaration made by the trustees of the recipient trust that they are not resident in the United Kingdom and each beneficiary of the trust who is known to the trustees is not ordinarily resident or, if a company, not resident in the United Kingdom.

Regulation 6, by way of an exception to regulations 3 to 5, ensures that where the whole of an interest distribution made to or received under a trust consitutes income of a person other than the trustees, there has to be in existence a valid declaration made by that person that he is not ordinarily resident or, if a company, not resident in the United Kingdom, in order for the interest distribution to be paid without deduction of tax.

Regulations 7 and 8 enable the Board to require trustees and managers of authorised unit trusts to supply information and make documents and other records available for inspection for the purpose of determining whether interest distributions were properly made without deduction of tax.

Regulation 9 specifies the purposes for which information obtained by the Board under regulation 7 or 8 may be used.