CFM17370 - MODs: deduction of tax

The deduction of tax regime for MODs

The tax deduction regime for MODs has three main aims.

First, to put the UK recipient in the same position (so far as possible) as if he received the real overseas dividend of which the MOD is representative;

Second, to ensure that a UK recipient of a MOD should not be able to claim DTR in circumstances where no overseas tax has been suffered.

Third, to prevent a UK recipient of a MOD or real overseas dividend claiming DTR in conduit arrangements where the benefit of the dividend is passed on by a corresponding manufactured payment.

These objectives are addressed by paragraph 4 of Schedule 23A, ITA07/S581 and S582, ITA07/S922-S925 and SI1993/2004.