Corporation Tax Act 2009 section 931L

Schemes involving manipulation of portfolio holdings rule

Section 931L is an anti-avoidance rule that prevents companies from artificially splitting shareholdings among connected parties to exploit the portfolio holdings exemption for distributions.

• This section targets dividends or distributions that would otherwise be exempt under the portfolio holdings rule in section 931G
• It applies where a scheme has as a main purpose securing exemption under the portfolio holdings rule by splitting holdings between connected companies
• If all relevant connected persons' holdings were combined and the total would exceed the 10 per cent threshold, the exemption is denied
• Denial of exemption under the portfolio holdings rule does not prevent the distribution from qualifying for exemption under any other exempt class