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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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ACT: tax credit & FA93: non-qualifying distributions etc

Prior to 1993-94 credit was given in a person’s higher rate assessment (other than a UK company) for tax at the basic rate where the income included a distribution in respect of which that person was not entitled to a tax credit.

From 1993-94 onwards, the credit was given at the lower rate. This kept the treatment in line with that applied to dividends (ICTA88/S233 (1)).

This provision applied to non-qualifying distributions (CTM20070) but did not apply to FID (ICTA88/S246D (5)).

A qualifying distribution received by a non-resident person (other than a company) may have been assessable under ICTA88/S233 (1)(b). That person would not get a tax credit on the distribution. From 1993-94, the assessable amount of that distribution was deemed to be the sum which, if reduced by an amount equal to IT on that sum at the lower rate would have been equal to the amount of the distribution actually made (ICTA88/S233 (1)(A)).

This provision did not apply to FID (Section 246D (5)).

IT treated by virtue of ICTA88/S233 (1)(A) as having been paid was not repaid.

See also CTM34270.