26 June 2003

This information is provided courtesy of Law-Now, CMS Cameron McKenna's free on-line information service.

www.law-now.com

New rules will allow dividends and interest to be paid electronically from next year 

From the beginning of next year companies and other
bodies paying dividends or interest will be able to do
so electronically and will no longer need to send a
dividend voucher or tax deduction certificate to the
recipient by post. On 19 June the Inland Revenue
published for consultation The Income and
Corporation Taxes (Electronic Certificates of
Deduction of Tax and Tax Credit) Draft Regulations
2003, which are designed to allow statutory dividend
and interest payment vouchers and tax deduction
certificates to be delivered by electronic means.

At present, a company paying a dividend is required to
send to the recipient by post a voucher stating the
amount of the dividend, the date of payment, and the
amount of the tax credit; and a person paying interest
or making other payments from which they are
obliged to deduct income tax must, when requested
by the recipient, send a written statement or
certificate showing the gross amount of the payment,
the tax deducted, and the actual amount paid.

Electronic delivery will only be permitted where the
recipient agrees to it, and where delivery is made in a
format which allows the information transmitted to
be stored and printed, and which "prevents alteration
of the contents": for example, the Revenue suggests
that information could be sent in a PDF file attached
to an e-mail, or could be made available on a secure
website for downloading by the recipient.

Earlier this year CREST consulted on the proposed
introduction in early 2004 of a new facility for the
cost-effective and efficient distribution of dividends
and interest through CREST (see the CREST Green
Paper entitled "Dividends and interest distributions in
CREST" at
http://www.crestco.co.uk/publications/green_books/dividends-0303.pdf).

The changes to the CREST system will only be made
once the new Regulations have come into force, which
is expected to be on 1 January next year.

The draft Regulations can be found at
http://www.inlandrevenue.gov.uk/consult_new/edividend.htm.

For further information please contact Mark Nichols
(Head of Tax) by telephone on
+44 (0)20 7367 2051 or by e-mail at
mark.nichols@cmck.com or Peter Bateman
(Corporate Professional Support Lawyer) by telephone
on +44 (0)20 7367 3145 or by e-mail at
peter.bateman@cmck.com.



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