Deductions at source - CIOT - The Chartered Institute of Taxation

Tax Law Rewrite Deduction at Source CIOT comments 14 November 200537 Clause 8537.1 We wonder if the various permutations of subsection (2) could be set out moreclearly, perhaps even splitting it back into the two paragraphs as under thecurrent legislation.38 Clause 8838.1 Despite the subsequent reference to “subsection (2)”, as a matter of draftingstyle, we would prefer the reference to subsection (1) to be in the form “section81(1)”. This is a more concise style of drafting and allows readers to see morereadily which section is being referred to.38.2 We repeat our comments relating to the possible inclusion of a term “qualifyingpartnership”.39 Chapter 1039.1 Q11: We understand the reasoning behind the deeming. However, we are notsure that it is necessary to adopt this approach. This is because it amounts tothe deemed deduction from a deemed payment, and the Rewrite Project hasalways striven to reduce the incidence of statutory deeming.39.2 As far as the unit holders are concerned, the tax treatment is akin to dividendsin that there is some income arising (albeit a deemed distribution in UUT cases)to which there is attached a credit. There seems to be no reason to deem anydeduction to have been made.39.3 As far as the trustees are concerned, the amount of the “deemed deduction” ismore significant as it impacts upon the tax payable by them. However, we aresure that the same result can be achieved more directly.39.4 Once one moves away from the deemed deduction approach, it might transpirethat the remaining provisions of Chapter 10 are better suited in another Part ofthe Bill altogether. This would give rise to a consequential amendment toclause 112(3), (4) and (6).40 Clause 9040.1 Q12: We do not object to the alignment of the law with the current practicewhich requires UUTs to account for the tax due under the SA provisions.41 Clause 9141.1 We are not sure that the steps in subsection (2) actually determine whetherthere is a useable excess from earlier years. Presumably, there is no suchexcess if the amount determined by the steps is nil or negative (as suggestedby paragraph 260 of the Explanatory Notes). However, this should be madeexplicit in the legislation.42 Part 2, Chapter 1142.1 We did not consider this Chapter in detail as the clauses were recentlyconsidered in our document dated 12 July 2005. We note, however, that theP/bc/subsfinal/tlr 8 14.11.05