Explanatory note

These Regulations, which come into force on 22nd March 1992, are made under provisions in section 737 of, and Schedule 23A to, the Income and Corporation Taxes Act 1988 (“section 737” and “Schedule 23A” respectively). Section 737 was amended by, and Schedule 23A was inserted by, section 58 of, and Schedule 13 to, the Finance Act 1991.

These Regulations contain provisions which apply to manufactured dividends in respect of the shares of companies resident in the United Kingdom. The provisions take account of the proposal to merge the London International Financial Futures Exchange and the London Traded Options Market of the London Stock Exchange; and the date of coming into force of these Regulations coincides with the completion of the merger between the two Exchanges.

These Regulations are in a number of parts, of which Part I is general. Regulation 1 provides for citation and commencement, regulation 2 contains definitions, and regulation 3 is introductory.

Regulation 4 provides that these Regulations apply only to manufactured dividends on United Kingdom equities.

Part II of these Regulations makes changes in the definition of “unapproved manufactured payment” in paragraph 1(1) of Schedule 23A. Regulation 5 contains definitions for the purposes of this part, and regulations 6, 7 and 10 prescribe various persons and circumstances for the purposes of paragraph (b) of that definition. The effect of these regulations is that manufactured dividends do not constitute unapproved manufactured payments when paid by the prescribed persons in the prescribed circumstances. Regulation 8 defines “the Maxlong limit” and “the Maxshort limit”, and regulation 9 “the Deltapluslong limit” and “the Deltaplusshort limit”, four terms that are used in regulation 7.

Part III of these Regulations modifies section 737. Regulation 11 contains definitions for the purposes of this part, and regulation 12 prescribes various persons for the purposes of subsection (7A) of that section. Regulation 13 makes provision for the modification of section 737(1) in the cases specified in that regulation; and regulation 14 makes provision for the modification of section 737(5A).

Part IV of these Regulations contains administrative provisions relating toSchedule 23A.

Regulation 15 contains definitions used in this Part.

Regulation 16 provides that, in certain limited circumstances, a statement in writing under section 234(3) of the 1988 Act need not be given where a manufactured dividend is paid.

Regulation 17 makes provision for different types of manufactured dividend to be shown separately in a return under Schedule 13 to the 1988 Act.

Regulation 18 provides for section 21 of the Taxes Management Act 1970 to apply where certain persons pay certain types of manufactured dividend.

Part V of these Regulations contains administrative provisions relating to section 737.

Regulation 19 contains definitions used in this Part.

Regulation 20 makes provision for the accounting for tax chargeable whereregulation 13 applies.

Regulation 21 makes provision for the furnishing of information where a manufactured dividend is paid.

Regulation 22 contains provisions that correspond to those in regulation 18.

Regulation 23 makes provision for the treatment of tax taken into account under regulation 13 in certain circumstances.