Corporation Tax Act 2010 section 784

Treatment of recipient of manufactured dividend

Section 784 deals with the corporation tax treatment, in the hands of the recipient (or, if different, the owner), of a manufactured dividend.

• A manufactured dividend received by a UK company is treated as if it were a real dividend from the company whose shares are involved in the arrangement.
• Where the recipient and the beneficial owner of the manufactured dividend are different persons, it is the owner rather than the immediate recipient who is treated as receiving the dividend.
• The treatment applies for corporation tax purposes, ensuring that manufactured dividends are taxed in the same way as genuine dividends paid on the underlying shares.
• This provision prevents a mismatch in tax treatment that could otherwise arise when shares are lent or sold under repurchase agreements and substitute payments are made in place of actual dividends.