Dividends and Distributions: Tax

The Chancellor, Alistair Darling, delivered the 2009 Budget on 22 April 2009. This update is our summary and analysis of the key business tax announcements.

A summary of the issues on which we anticipate that the government will make announcements in the 2011 Budget.

A summary of the issues on which we anticipate that the government will make announcements in the 2012 Budget.

A summary of the issues on which we anticipate that the government will make announcements in the 2013 Budget.

The First-tier Tribunal decided that a tax avoidance scheme designed to exploit a perceived mismatch between the accrued income scheme rules and the stock lending manufactured interest provisions failed (Barnes v HMRC [2011] UKFTT 95 (TC)). NOTE: this decision was upheld by the Upper Tribunal: see Legal update, Accrued income and manufactured interest tax scheme ineffective (Upper Tribunal).

An update commenting on announcements in the 2008 Pre-Budget Report relevant to small and medium-sized businesses and their owners.

The Advocate General has delivered her opinion in relation to European Commission v Republic of Finland (Case C-342/10).

Drafting notes to accompany the letter to HMRC seeking its view under the non-statutory clearance procedure. This drafting note was formerly known as Code of Practice 10 application: drafting note.

On 27 July, the House of Lords gave its judgment in Jones v Garnett [2007] UKHL 35.The facts are relatively common in family owned businesses. Mr and Mrs Jones each acquired half the ordinary share capital in a company. Mr Jones provided IT consultancy services via the company and earned the income of the business. Mrs Jones provided administrative support. Both took a salary but Mr Jones' salary was less than he would have earned in the market. The balance of the company's profits were paid as dividends. This reduced the total tax bill because national insurance contributions are not payable on dividends and Mrs Jones paid tax at lower rates than Mr Jones.HMRC argued that anti-avoidance rules applied to the dividends paid to Mrs Jones to treat the dividends as income of Mr Jones. The rules apply to gifts between spouses if the transferor (or spouse) has an interest in the asset or income deriving from it and the asset is wholly or substantially a right to income.Their Lordships agreed that the anti-avoidance rules applied in principle but dismissed the appeal on the basis that ordinary shares are not substantially a right to income. HMRC immediately announced that legislation will be introduced to reverse the decision.Individuals that are considering providing their services via a corporate vehicle must consider carefully whether incorporation is appropriate. Such companies are likely to be caught by the IR35 rules or the new managed service company rules. Additio

An update about a decision of the Tax Chamber of the First-tier Tribunal about the taxation of arrangements designed to turn discretionary bonuses into dividends.

The Special Commissioners have determined a dispute between the Inland Revenue and a taxpayer as to the market value, as at 31 March 1982, of unquoted company shares.

In the 2007 Budget, Gordon Brown, then Chancellor, announced that the 10% starting rate of income tax would be abolished for earnings and pensions income with effect from 6 April 2008 (see Legal update, Budget 2007: Income tax allowances, rates and bands). However, this proved very unpopular as the effect would be to make the poorest members of society worse off. There were calls for the government to take action to counteract this effect (see Legal update, 10% starting rate: backbenchers withdraw Finance Bill amendment after Chancellor promises help).In response to this, on 13 May 2008, the current Chancellor, Alistair Darling, announced the following amendments to the income tax regime:1. Increasing the personal allowance for 2008/09 by £600, to £6,035, with effect from September 2008 but backdated to 6 April 2008.2. Reducing the higher-rate income tax threshold by £600 (presumably, also backdated to 6 April 2008). HMRC explained on its website that the higher-rate threshold is the total of the personal allowance and the basic rate limit, meaning that the basic rate limit (the level of taxable earnings, after the personal allowance is applied, from which higher-rate tax applies) would be decreased by £1,200 in total, to £34,800. The idea is to ensure that higher-rate taxpayers, who would be largely unaffected by the abolition of the starting rate, do not benefit from increased personal allowances.Draft legislation effecting these changes is to be included in

The European Commission launched a consultation on taxation problems that arise when dividends are distributed across borders to portfolio and individual investors on 28 January 2011.

The Economic and Financial Affairs Council, on 30 November 2011, adopted a Council Directive on the common system of taxation applicable in the case of parent companies and subsidiaries of different member states. This Directive is a recast of Council Directive 90/435/EEC of 23 July 1990, which has been amended several times.

An update about the EU directive on the taxation of mergers, divisions, partial divisions, transfers of assets and exchanges of shares, adopted by the Council of the European Union on 1 October 2009.

On 6 December 2007, HM Treasury and HM Revenue & Customs published a joint consultation paper on a principles-based approach to financial products tax avoidance. Such an approach involves a departure from the recent trend to create targeted anti-avoidance legislation. Instead, a principles-based approach involves legislation that is light on detail but that instead embodies a fundamental principle to which taxpayers should have regard when structuring their affairs.The consultation paper sets out draft legislation, adopting such an approach, for two areas: disguised interest and sales of income streams.Comments on the draft legislation, and on the principles-based approach in general, are invited by 28 February 2008.

The European Court of Justice has upheld the UK's right to provide a tax credit on dividends paid by UK resident companies to UK resident companies, while denying a tax credit on dividends paid by UK resident companies to non-UK resident companies.

The House of Lords has held that it was not a breach of the non-discrimination articles in the UK's double tax treaties with the US and Japan to deny a UK company the right to pay dividends free of UK advance corporation tax to its US or Japanese parent.

The Supreme Court has held that the legislation that retroactively denied parties to the Franked Investment Income group litigation the benefit of the extended time limit for bringing their claims breached their legitimate expectations, and agreed to refer a further question concerning the validity of a further restriction set out in section 304 of the Finance Act 2004 to the European Court of Justice.

The Advocate General has opined that various aspects of the UK regime for taxing dividends from non-UK resident companies are contrary to EC law.

The Court of Appeal has held that certain manufactured payments represented manufactured overseas dividends in the hands of a UK resident company, even though the dividends had been paid out of share premium account, and so were deductible as management expenses.

The High Court has ruled on the interest payable when calculating the compensation due to a UK company that has suffered loss under the UK's advance corporation tax regime for dividends.

The Court of Appeal has given judgment in the franked investment income group litigation, and referred some questions back to the European Court of Justice for further guidance.

The European Court of Justice has held that a withholding tax imposed on dividends paid by a Finnish subsidiary to a non-resident, open-ended investment company contravened the principle of freedom of establishment under the EC Treaty.

In a decision released on 21 December 2010, the Court of Appeal endorsed the decision of the High Court in Test Claimants in the ACT Group Litigation (Class 4 and Class 2) v HMRC, [2010] EWCA Civ 1480.

A discussion of the tax issues that may arise when a company in one country pays a dividend to a shareholder in another.

Update on the decision of the High Court in the Franked Investment Income Group Litigation case.

This practice note gives an overview of direct taxes in the UK tax regime. It covers income tax, corporation tax and capital gains tax. It discusses the principles of calculation, rates, payment and compliance, and reliefs (such as capital allowances and research and development (R&D) relief).

ICAEW and ICAS have published additional guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006 (TECH 03/09).

On 25 November 2008, the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland published draft guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006.

The Court of Appeal (CA) confirmed that a distribution from share premium account of an overseas company is dividend income for UK tax purposes if the legal mechanism under which it is distributed is that of an income distribution. The CA also confirmed that the repo rules do not apply if the seller subscribes for new shares from the buyer rather than buying the same or similar existing securities  (HMRC v First Nationwide [2012] EWCA Civ 278).

Where a company that is owned by a single shareholder makes a charitable donation at the behest of that shareholder, will the donation constitute a distribution to the shareholder?

HMRC published revised guidance on the tax treatment of payments to individuals and non-corporates following a share capital or share premium reduction on 11 February 2013. Note: HMRC published an amended version of its revised guidance on 4 March 2013. We have noted the changes in the text below.

A practice note on the tax treatment of dividends.

I refer to the paragraph headed 'Effect of Waiver' in the waiver of dividend practice note. The last sentence of this paragraph suggests that in the event of a dividend waiver by a shareholder or shareholders where such an amount can be divided between the remaining non waiving shareholders so that the overall amount per share increases as a result of the waiver(s), the amount of distributable reserves of a company needs to be the inflated amount to cover this, even though the amount being distributed is not changing and therefore, is still lawful. Is this the intention?

My question is in relation to taxation of members of a limited partnership. The income is received from an EU jurisdiction that levies withholding tax on income payments made to the limited partnership. If a limited partnership is not a "company" under the Parent Subsidiary Directive (90/435/CEE) so the LP cannot rely on it, can members of the LP, all EU companies, obtain benefit of the Directive, if they otherwise meet the Directive's thresholds and requirements? If members of the LP cannot rely on the Directive, does the HMRC considers that they can rely on double taxation treaties?

An update about the draft legislation concerning unauthorised unit trusts and manufactured overseas dividends, to be included in the Finance Bill 2010, published by HMRC on 3 November 2009.

An update on the statutory instruments, made on 11 February 2009, giving domestic legislative effect to the new double tax treaties with France and the Netherlands.

On 11 December 2012, HMRC and HM Treasury published draft legislation for the Finance Bill 2013 and consultation responses. Note: we are inserting links to more detailed PLC analysis of some of the draft legislation as we publish it.

 This practice note tracks cases of significance from a UK direct tax perspective that involve claims that direct tax law infringes the freedoms set out in the Treaty on the Functioning of the European Union (TFEU) (previously known as the EC Treaty). Links are provided to relevant judgments and PLC legal updates and articles. It also contains a summary of the key principles of EU law relevant to UK tax and a summary of the TFEU freedoms most often encountered in direct tax cases. 

A legal update about the HMRC announcement of 15 March 2010 concerning The Offshore Funds (Tax) Regulations 2009 (SI 2009/3139).

On 28 January 2011, the European Commission launched a public consultation on withholding taxes on cross-border dividends. The consultation will run from 28 January 2011 to 30 April 2011.

The ECJ has clarified several aspects of its original decision in the Franked Investment Income (FII) Group Litigation (Test Claimants in the FII Group Litigation v HMRC (Case C-35/11).

The Finance (No.3) Bill 2010 Public Bill Committee agreed to several provisions of the Bill on 19 October 2010.

The Finance Bill 2008 is scheduled to proceed to Committee of the Whole House stage, for debate in the House of Commons, on the 28 and 29 April 2008.We will publish a further update, when details of the measures to be debated in the Committee of the Whole House are published.For details of the Finance Bill 2008 (first draft) as published on 27 March 2008, see Legal update, Finance Bill 2008.Source:Progress of Finance Bill 2008.

On 28 April 2008, the following clauses of the Finance Bill 2008 (as to which, see Legal update, Finance Bill 2008) were agreed, unamended, by the Committee of the Whole House of Commons:1. Clause 3 (Abolition of starting and savings rates, and creation of starting rate for savings).2. Clause 5 (Small companies' rates and fractions for financial year 2008).3. Clause 6 (Rate of capital gains tax).4. Clause 21 (Amusement machine licence duty).Source: Committee of the Whole House Proceedings as at 28 April 2008; House of Commons Committee Stage debate: 28 April 2008.

Royal Assent to the Finance Bill 2008 will be granted between 18 July 2008 and 5 August 2008. This is because:1. Royal Assent can be given any time after the House of Lords debate on the Finance Bill 2008 (scheduled for 18 July 2008).2. The Budget 2008 resolutions will expire on 5 August 2008 unless the Finance Bill 2008 receives Royal Assent by then (under section 1 of the Provisional Collection of Taxes Act 1968).Source: Progress of the Finance Bill: date of House of Lords debate.

On the morning of 20 May 2008, the following clauses of, and Schedules to, the Finance Bill 2008 (as to which, see Legal update, Finance Bill 2008) were agreed, unamended unless otherwise stated, by the Public Bill Committee of the House of Commons:1. Clause 28 (Enterprise investment scheme).2. Clause 29 and Schedule 11 (Venture capital schemes).3. Clause 30 (Enterprise management incentives). The Treasury minister stated that guidance on the new 250 employee limit will be published after Royal Assent.4. Clause 31 and Schedule 12 (Tax credits for certain foreign distributions). The amendments to Schedule 12 tabled by the government on 15 May, which remove the tax credit from distributions by offshore funds in response to avoidance activity, were agreed (see Legal update, Finance Bill 2008: proposed government amendments (15 May 2008)).5. Clause 32 (Small companies relief: associated companies).6. Clause 33 and Schedules 13 and 14 (Company gains from investment life insurance contracts). Amendments were made to Schedule 14.7. Clause 34 and Schedule 15 (Trade profits: changes in trading stock). The Treasury minister stated that the intention of the legislation is to preserve the current caselaw and concessionary position and that HMRC extra-statutory concession A32 will become obsolete.8. Clause 35 (Non-residents: investment managers). The Treasury minister confirmed that all transactions that currently meet the definition of "investment transaction" in primary legis

On the morning of 3 June 2008, the following clauses of the Finance Bill 2008 were agreed, unamended unless otherwise stated, by the Public Bill Committee of the House of Commons:1. Clause 61 (Controlled foreign companies). The amendments proposed by the government (see Legal update, Finance Bill 2008: proposed government amendments (15 May 2008)) were agreed. The Minister explained the avoidance schemes, disclosed to HMRC under the tax disclosure rules, that clause 61 is intended to block. In HMRC's view, few (if any) commercially driven arrangements will be affected by the changes and if they are, they should be protected by the CFC motive test. The Minister also stated that the introduction of a control test relating to the income of a company should not be taken as an indication of how the government intends to amend the CFC rules in the ongoing consultation on the taxation of foreign profits. Guidance on the new provisions will be published shortly, probably in the summer recess. 2. Clause 62 (Intangible fixed assets: related parties).3. Clause 63 (Repeal of obsolete anti-avoidance provisions.4. Clause 64 (Income of beneficiaries under settlor-interested settlements).5. Clause 65 (Income charged at dividend upper rate).6. Clause 66 (Payments on account of income tax). A minor amendment was made.7. Clause 67 (Allowances for non-resident nationals). 8. Clause 68 (Thermal insulation of buildings).9. Clause 69 (Expenditure on required fire precautions).10. Clause

The Finance Bill 2008 received its second reading in the House of Commons on 21 April 2008. For the Hansard transcript of the debate, see Second reading. As expected, much of the debate focused on the withdrawal of the 10% starting rate (clause 3 of the Finance Bill 2008). John McFall (Chairman of the Treasury Committee) offered to ask the Treasury Committee to explore measures with the government that would compensate for the withdrawal of the 10% starting rate with a view to reporting in June or July. While the Chief Secretary to the Treasury welcomed the offer, she indicated that it would be with a view to reporting back in advance of the Pre-Budget Report. Labour backbenchers have tabled an amendment seeking to defer the introduction of clause 3. The opposition are expected to table further amendments on Monday. A new early day motion was also lodged by the opposition. Clauses 3, 5, 6, 15, 21, 49, 90 and 117 and new Clauses amending section 74 of the Finance Act 2003 were committed to a Committee of the whole House (to be debated on 28 and 29 April 2008) with the remainder of the Bill committed to a Public Bill Committee (dates to be announced).For links to the debates and amendments tabled, see Finance Bill 2007-2008.

An update on the Finance Bill 2009 debates of the Public Bill Committee on 16 June 2009.

An update about the Public Bill Committee debates on the Finance Bill 2009 on 21 May 2009.

The government has announced that draft Finance Bill 2011 clauses will be published on 9 December 2011.

We have learned from HM Treasury that, following the 2008 Budget (delivered on 12 March), the first version of the Finance Bill 2008 is expected to be published on Thursday 27 March 2008. This has been confirmed in a Statement by the Financial Secretary to the Treasury.We will publish a further update, including a link to the Bill, when it is published.

A practice note about measures to reform UK corporation tax in the following areas: Controlled foreign companies. Profits and losses of overseas branches. Intellectual property. Dividends received by companies. Interest paid by companies. International movement of capital (treasury consent).

An update on HMRC's note entitled "Worldwide debt cap current thinking: update note on design changes" published on 7 April 2009.

An update announcing that the draft legislation implementing changes to the taxation of the foreign profits of companies was published on 9 December 2008.

An update about amendments to Finance Bill 2009 tabled by the government on 11 June 2009.

An update on the letter from the Financial Secretary to the Treasury, issued on 30 April 2009, giving details of proposed amendments to the draft foreign profits legislation in the Finance Bill 2009.

A brief legal update about the High Court's decision in Test Claimants in the ACT Group Litigation (Classes 4 & 2) v HMRC [2010] EWHC 359 (Ch), released on 26 February 2010.

During the 2 July debate on the Finance Bill 2008, the government noted that due to an oversight, the rules for double tax relief on foreign income did not reflect the reduction in the corporation tax rate. HMRC will discuss the solution with business and provisions, backdated to 1 April 2008, will be included in the Finance Bill 2009. (See Legal update, Finance Bill 2008: Report stage proceedings (2 July 2008).)On 4 July 2008, HMRC issued a statement clarifying the issue. When taxing dividend income falling between two years of assessment, it is apportioned between them according to the number of days falling within each year. If the tax rate differs in those years (as for dividends straddling 1 April 2008), an average rate is used. However, in calculating the rate applicable to the "mixer cap" (limiting relief for foreign tax by reference to the UK tax rate: see Practice note, Cross-border dividend payments), the rate in force at the date of the dividend is used. This means that, for dividends straddling 1 April 2008, the mixer cap may be set by reference to a lower rate than the rate at which the dividend is taxed, which may lead to unrelieved foreign tax. Eligible unrelieved foreign tax (see Practice note, Cross-border dividend payments) may not always be available to offset this.HMRC confirmed that it will work with business to find a solution. Meanwhile, HMRC confirmed that it will use its statutory discretion to give the necessary double tax relief by applyi

An update on HMRC's consultation on extra-statutory concessions published on 3 March 2009.

An update about HMRC's stakeholder consultation on double tax treaties, launched on 14 December 2009.

An update about the draft legislation published by HMRC on 1 June 2009, dealing with the financial services exemption and the targeted anti-avoidance rule aspects of the worldwide debt cap provisions.

The Court of Appeal has decided by a majority that the UK's thin capitalisation rules (as they applied before 2004) did not infringe the right to freedom of establishment as the "arm's length" test alone satisfied the need for taxpayers to be permitted to show commercial justification for their transactions. (Test Claimants in the Thin Cap Group Litigation v HMRC [2011] EWCA Civ 127.)

I am setting up a new limited company for a client. How will being out of the country for more than 6 months of the year affect a shareholder when he takes dividends?

This note is a general summary of the anti-avoidance rules applying for the purposes of UK income tax and the situations in which one person may be liable for income tax primarily chargeable to another person. It also provides links to notes describing other aspects of the UK income tax rules, such as how income is taxed and exemptions from income tax.

The Court of Appeal has held that dividends paid to a wife from a company jointly owned by her and her husband were not taxable as income of the husband, but were taxable as income of the wife.

This note is a general summary of the rules for calculating income for the purposes of UK income tax. It also provides links to notes describing other aspects of the UK income tax rules, such as how income is taxed and exemptions from income tax.

The High Court has held that payment of dividends to investors was not a 'qualifying business activity' for the purposes of enterprise investment relief.

This note is a general summary of the principles underpinning UK income tax. It describes what income is and how it is taxed. It also provides links to notes describing other aspects of the UK income tax rules, such as calculation of income and exemptions from income tax.

This note is a general summary of how losses may be used under the UK income tax rules. It also provides links to notes describing other aspects of the UK income tax rules, such as how income is taxed and exemptions from income tax.

A checklist of questions to ask to determine the tax treatment of a cross-border share sale.

My query relates to the interaction between the distributions legislation in Part 9A CTA 09 and the loan relationships legislation in Part 5 CTA 09. Facts are as follows: Company A is a non-UK holding company. Company B is an intermediate UK holding company wholly-owned by Company A. Company B owns 90%+ (of share cap, profits, assets on winding up) of a number of UK subsidiary companies including company C. As part of a reorganisation, company C will be making a distribution in specie of the benefit of an intra-group debt (in respect of which it is the creditor) to Company B. The debtor is another group company. The debt will remain with Company B and is expected to be fully repaid in due course. How is this dividend in specie treated for UK corporation tax purposes? Is it purely dealt with under the loan relationship regime under Chapter 4 of Part 5 CTA 09 (by reference to the priority rules in section 464 CTA 09)? Or does consideration also need to be given to establish which category it falls under in Chapter 2 of Part 23 CTA 2010 as an asset of Company C being distributed to Company B as distribution in specie and, accordingly, its corresponding treatment under Part 9A CTA 09?

An equity investment company is to be wound down. There is a sole shareholder who holds both the subscriber ordinary share and the entire issue of redeemable preference shares. The shareholder would like to redeem the preference shares by way of a dividend in specie of the net assets of the company (the value of which is below the nominal value of the preference shares). The question is what steps are required to ensure the transaction constitutes a repayment of capital within the meaning of CTA2010 S.1000(1)? Any help would be greatly appreciated.

When one company transfers its subsidiary company by way of a distribution in specie to another company, is stamp duty due? What should be entered in the consideration box on the stock transfer form?

I would like to know if a UK pension fund, charity or investment fund pays a dividend to an entity within the UK, EU, EEA or third country, is there any witholding tax levied?

A legal update summarising announcements we expect to be in the emergency Budget on 22 June 2010. (Free access.)

In this article, we summarise the key business tax changes made by the Finance Act 2008, which received Royal Assent on 21 July 2008. These include wide-ranging reforms of capital gains tax, capital allowances, rates of tax and the taxation of non-domiciliaries which apply from April 2008 and significant changes to HMRC information powers which are likely to come into effect in April 2009.

A practice note listing key forthcoming dates in 2013 for corporate tax practitioners.

HMRC published draft legislation prohibiting tax credits for manufactured overseas dividends on 15 September 2011. The measures are to have effect from that date.

The Special Commissioner has considered negligible value claims, the circumstances in which an issue of shares to a company's sole shareholder will be regarded as a "reorganisation" and when a transaction between a company and its sole shareholder will be regarded as an arms' length bargain.

A legal update about the announcement by HMRC that the NASDAQ OMX Tallinn and the Bahamas International Securities Exchange have obtained "recognised stock exchange" status.

On 1 April 2008, HMRC announced that its new non-statutory tax clearance procedure had been extended to all of its business customers and issued guidance on the new procedure. Under the new procedure, HMRC aims to provide clearance within 28 days on: 1. Areas of material uncertainty arising within four Finance Acts of the introduction of any new legislation. 2. Legislation older than the last four Finance Acts where there is material uncertainty around the tax outcome of an issue of commercial significance for the business. For more information about the new procedure, see Legal update, HMRC extends new tax clearance procedure to all businesses. We have amended (and renamed) our standard COP10 clearance application and drafting note to reflect the new procedure and guidance. See, Standard document, Non-statutory clearance application and Drafting note, Non-statutory clearance application.

This overview summarises the tax issues for a UK-based multinational wishing to move its tax residence from the UK, and explains how this can be achieved in practice. It covers reasons for corporate emigration, migrating an existing company, introducing a new holding company, post-implementation reorganisations and dividend access arrangements.

PLC Tax has updated its legislation trackers to reflect developments in April 2011.

PLC Tax had updated its legislation trackers to reflect developments in June 2011.

The Chancellor, Alistair Darling, delivered his first Pre-Budget Report on 9 October 2007.

An update about the consultation document published by HM Treasury and HMRC on 24 November 2008 relating to a principles-based approach to financial products tax avoidance.

The Privy Council has held that the issue of a debenture followed by its almost immediate (and expected) redemption could be regarded as a single transaction for the purposes of construing Jamaican transfer tax statutes.

An update on DCC Holdings (UK) Limited v HMRC [2008] EWHC 2429, released on 17 October 2008.

A practice note on the tax treatment of scrip dividends and dividend reinvestment plans (DRIPs).

A legal update about the Corporation Tax (Treatment of Unrelieved Surplus Advance Corporation Tax) (Amendment) Regulations 2010 (SI 2010/669).

This note considers the commercial reasons for a share buyback, the different types of buyback and the main tax issues that arise in respect of a buyback.

The First-tier Tribunal (Tax) has released its decision in Patmore v HMRC [2010] UKFTT 334 (TC).

An update about the Distributions (Excluded Companies) Regulations 2009 (SI 2009/3314), which were made on 15 December 2009.

A legal update about the HM Treasury and HMRC announcements about capital distributions made on 24 February 2010.

A practice note on the tax treatment of exempt distributions (direct and three-cornered distributions falling within sections 1073 to 1099 of the Corporation Tax Act 2010 (previously sections 213 to 218 of Income and Corporation Taxes Act 1988)), known as "statutory demergers".

An update about the draft Tax Credits (Excluded Companies) Regulations 2009, which take effect from 22 April 2009.

A document containing items formerly found in PLC Tax legislation trackers but that are now in force.

A document tracking the development of certain notable pieces of proposed new legislation relating to the taxation of owner-managed businesses.

The Advocate General has issued an opinion on taxation of dividends in Finland which calls into question the legitimacy of the UK’s system of taxation of dividends.

The last week in November 2008 proved to be momentous for UK corporate taxpayers and their advisers. First, the government confirmed in the Pre-Budget Report that UK companies are to be given a dividend exemption for dividends from non-UK companies. This was followed by the High Court judgment in the Franked Investment Income Group Litigation case.

Speaking at the Oxford University Centre for Business Taxation conference on 7 December 2007, Mike Williams of HM Treasury gave a brief update on HM Treasury's current thinking on the ongoing discussion on reform of the regime for the taxation of foreign profit launched by HM Treasury and HM Revenue & Customs on 21 June 2007.

On 14 May 2013, the Economic and Financial Affairs Council gave the European Commission a mandate to negotiate amendments to the EU's Agreements with Switzerland, Liechtenstein, Monaco, Andorra and San Marino on the taxation of savings income.

A discussion about the tax factors to consider when deciding whether to locate a holding company in the UK, including the territorial scope of UK tax, relief for financing expenses, shareholder tax issues, VAT, stamp duty, and anti-avoidance rules, such as transfer pricing.

Party A = UK co Party B = non-UK co Party C = UK Co For various reasons, there is a situation in which Party A makes a distribution to Party B, which passes that distribution on to Party C. For all intents and purposes, Party B is effectively a trustee/bare nominee, as Party C is the beneficial owner of the payment - Party B always passes the distribution back to Party C, there is no danger of it holding on to it. Under s1032(1)(a) CTA 2010, the CTA would not treat this as a distribution if the payment was made to another company which is within the charge to corporation tax. Clearly, Party C is within the charge to corporation tax, whereas party B is not. Is 1032 to be read literally, or can we "look through" party B to party C as beneficial owner, and therefore conclude that this would constitute a payment to another company within the charge to corporation tax?

The First-tier Tribunal found that the non-availability of a repayable tax credit in respect of dividends from non-UK companies and foreign income dividends of UK companies breached Community Law but did not extend the time limits for claiming a refund. (The Trustees of the BT Pension Scheme v HMRC [2011] UKFTT 392 (TC).)

An update about new guidance published by HMRC on 21 July 2009.

A protocol to the double taxation treaty between the UK and Switzerland, introducing a so-called anti-conduit provision, may make it more difficult to claim the benefit of the treaty in relation to payments of interest, dividends and royalties between residents of the UK and Switzerland.The protocol also:1. Reduces the rate of withholding from dividends paid to 10% plus shareholders.2. Restricts the availability of treaty benefits for certain dual resident companies.3. Strengthens the provisions relating to the exchange of information between the UK and Swiss tax authorities.4. Makes a number of other changes.The protocol will come into force after the UK and Switzerland have notified each other of completion of their respective domestic legislative procedures for implementing the protocol.

An update about our recently revised practice note on transactions in securities and our new clearance application letter with drafting notes. (Free access.)

The  Upper Tribunal has confirmed that the non-availability of a repayable tax credit in respect of dividends from non-UK companies and foreign income dividends of UK companies infringed the taxpayer's EU law rights but held that the taxpayer was out of time for making a claim for relief under section 43 of the Taxes Management Act 1970 (The Trustees of the BT Pension Scheme v HMRC [2013] UKUT 0105 (TCC)).

HM Revenue & Customs has published Business Briefs clarifying the VAT treatment of share issues and input tax recovery.

On 15 June 2005 HMRC published an update setting out its position on the VAT treatment of share issues and subsequent input tax recovery, following the decision in Kretztechnik AG v Finanzamt Linz (see PLC Legal update, VAT: ECJ alleviates tax burden on the raising of new capital). HMRC states that companies that make a first issue of shares in circumstances that are the same as those in Kretztechnik will now be entitled to recover the input tax incurred on the costs of the issue to the extent that they make taxable supplies: companies with wholly taxable outputs will be entitled to recover all of the relevant input tax, while those with both exempt and taxable outputs will be entitled to recover a proportion in accordance with their partial exemption method. Claims for input tax in respect of past share issues will be accepted subject to the three-year capping rules. HMRC also states that it is taking legal advice on the extent to which Kretztechnik applies to (1) other share issue situations (e.g. as part of a company merger, demerger or other restructuring) and (2) transactions involving issues of financial instruments and securities other than shares, and that it will issue further guidance after the advice has been received. Any claims for repayment in respect of such other circumstances or transactions received in the interim will be acknowledged but not processed.

What are the tax implications for the distributing company, if it distributes assets to shareholders? Does it make any difference if the distribution is made in return for the shareholders giving up shares?

What are the tax consequences for a single member private limited company whose only asset is cash being voluntarily wound up and the cash paid to the sole shareholder?

I recall reading in one of your practice notes that funds received by shareholders under a simple reduction of capital are taxed in the same way as capital gains. I cannot locate the reference Could you confirm ?