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HMRC internal manual

Company Taxation Manual

ACT: FID: repayment or set off of ACT: qualifying FID

ICTA88/S246P (3) & (7)

A matched FID was an FID that was matched with a distributable foreign profits (DFP) of the company at the time of the claim to ACT repayment or set off.

Where only part of an FID was matched, that part was treated as a separate - matched -dividend.

A company would only account for ACT on the excess of FID paid over FID received.

The amount available for matching with DFP should not have exceeded this excess. However, the second assumption in CTM21420 was that no distributions were received. Without anything else this would mean that there could be notional surplus ACT even though no ACT has been paid.

To overcome this the legislation introduced the concept of qualifying FID.

A qualifying FID is a matched FID paid in the relevant period (CTM21405) which the company had elected to be a qualifying FID.

A company could only elect for a matched FID to be a qualifying FID to the extent that FID paid in the relevant period exceeded FID received or treated as received in that period.

In this context FID paid did not include FID which could not be matched with DFP because the company failed to comply with an information requirement.