Explanatory note

These Regulations amend the Income Tax (Manufactured Interest) Regulations 1992 (S.I.1992/2074) (“the principal Regulations”).

The amendments are made in consequence of the provisions contained in Chapter II of Part IV of the Finance Act 1996 (c. 8) (“loan relationships”) which supersede a number of the provisions of Schedule 23A to the Income and Corporation Taxes Act 1988 (“Schedule 23A” relating to manufactured interest paid or received by companies in respect of United Kingdom securities. In addition, paragraph 52(6) of Schedule 14 to the 1996 Act repeals the provisions of paragraph 6 of Schedule 23A relating to manufactured payments other than manufactured dividends.

Regulation 1 provides for citation and commencement, and regulation 2 for interpretation.

Regulations 3 to 10 amend the principal Regulations so as to take account of the new provisions relating to corporate loan relationships. In particular regulations 3, 4 and 6 to 9 remove the distinction between approved and unapproved manufactured interest from the principal Regulations. Regulations 5 and 10 remove the modification of section 737 of the Income and Corporation Taxes Act 1988 made by regulation 14 of the principal Regulations, following the amendment made to that section by paragraph 38 of Schedule 14 to the 1996 Act.