Corporation Tax Act 2009 section 931O

Schemes involving payments for distributions

Section 931O is an anti-avoidance rule that removes the tax exemption from distributions where a tax advantage scheme involves payments being made, or income being given up, in return for receiving those distributions.

• A dividend or distribution that would normally be exempt loses that exemption if it forms part of a tax advantage scheme involving a payment or surrender of income rights
• The rule targets arrangements where a relevant person (the recipient or someone connected to them) makes a payment or gives up income as consideration for receiving the distribution
• The payment or surrender of income must be made under a liability where the consideration consists wholly or partly of the distribution itself, or the right to receive it
• Where the scheme involves a payment (rather than giving up income), the payment must also meet the conditions set out in section 1301, which restricts deductions for annual payments