Corporation Tax Act 2010 section 735

Abnormal dividends used for exemptions or reliefs (circumstance A)

Section 735 sets out the first of a series of circumstances under which HMRC may counteract a tax advantage arising from certain transactions in securities, specifically where abnormal dividends are used to obtain tax exemptions or reliefs.

• This section describes "circumstance A" — one of several defined situations that can trigger HMRC's power to counteract a tax advantage from transactions in securities.
• The focus is on cases where a company receives an abnormal amount by way of dividend, and this is used to secure a tax exemption or relief that would not otherwise be available.
• The purpose test in this section is tailored specifically for companies, differing from the equivalent income tax rules that apply to individuals.
• Certain earlier provisions relating to specific sub-paragraphs of the predecessor legislation have been dropped because they no longer have any practical effect for corporation tax purposes.