Corporation Tax Act 2010 section 814D

Treatment of recipient of manufactured dividend

Section 814D sets out how a company receiving a manufactured dividend should be taxed for corporation tax purposes, including the circumstances in which the general treatment does not apply.

• A manufactured dividend received by a company is generally treated as if it were a real dividend on the underlying shares for corporation tax purposes, and this treatment extends to any company claiming title through or under the recipient.
• The dividend treatment does not apply where the manufactured dividend is already included in calculating the profits of a trade carried on by the company, or where the company is seeking double taxation relief in respect of any dividend.
• When applying the rules on company distributions, references to the "payer" are redirected to the company that actually pays the real dividend, rather than the party making the manufactured payment, and the recipient company cannot claim a tax credit for exempt qualifying distributions.
• These rules take priority over loan relationships provisions that would otherwise prevent a credit from being brought into account, ensuring the manufactured dividend treatment cannot be overridden by other parts of the legislation.