Corporation Tax Act 2010

783 Treatment of payer of manufactured dividend

(1) This section applies if—

(a) a company (“the payer”) pays a manufactured dividend, and

(b) the dividend of which the manufactured dividend is representative is taxable.

(2) For this purpose a dividend is taxable if—

(a) it is received by the payer and the charge to corporation tax on income applies to it, or

(b) it is received by a person other than the payer and the charge to corporation tax on income would have applied to it if it had been received by the payer.

(3) If the payer carries on a trade to which the manufactured dividend relates, the manufactured dividend is treated as an expense of the trade.

(4) But subsection (3) does not apply so far as the manufactured dividend is treated as mentioned in subsection (5) or (6).

(5) If the payer has investment business to which the manufactured dividend relates the manufactured dividend is treated as expenses of management of the business for the purposes of Part 16 of CTA 2009.

(6) If the payer carries on life assurance business to which the manufactured dividend relates, then so far as the manufactured dividend is referable to basic life assurance and general annuity business it is treated as if it were an expense payable falling to be brought into account at Step 3 in section 76(7) of ICTA (amount of expenses deduction).

(7) For the purposes of subsection (6), the manufactured dividend is treated as referable to basic life assurance and general annuity business so far as the dividend of which it is representative—

(a) is received by the payer and is so referable under section 432A of ICTA (apportionment of income and gains), or

(b) is received by another person and would have been so referable under section 432A of ICTA if it had been received by the payer.

(8) This section is subject to—

(a) section 796 (manufactured dividends: amounts exceeding underlying payments), and

(b) section 803 (power to deal with special cases).