Corporation Tax Act 2010 section 798

Manufactured overseas dividends less than underlying payments

Section 798 overrides the general rule for calculating the gross amount of a manufactured overseas dividend (MOD) in cases where the manufactured payment is less than the actual underlying dividend.

• This section applies when a manufactured overseas dividend is smaller than the real overseas dividend it represents.
• The normal rule for calculating the gross amount of a MOD (found in section 813(2)) is set aside in these circumstances.
• Instead, the gross amount of the MOD is determined by reference to the actual manufactured payment made, rather than by reference to the full underlying dividend.
• This ensures the tax treatment reflects the economic reality of the payment actually made between the parties, rather than overstating the amount by reference to the larger real dividend.