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HMRC internal manual

Company Taxation Manual

Particular topics: dividend-stripping: definitions

Dealing company

A company is a dealing company in relation to any holding if a profit on the sale of the holding would be taken into account in computing the company’s trading profits. On or after 2 July 1997 most dealers will in any case be within the charge to tax on distributions under ICTA88/S95. ICTA88/S736 should not be applied where ICTA88/S95 taxes the distribution in the hands of a dealer. ICTA88/S736 is therefore only likely to be used in relation to insurance companies that are excluded from ICTA88/S95.

Security

A security includes a share or other right.

Holding

A holding in a company is a holding of securities by virtue of which the holder may receive distributions made by the company. The company must be UK resident so that the distribution is not taxable in the hands of the dealing company.

Distribution

The word distribution has the same meaning as in ICTA88/S209 - ICTA88/S211 (see CTM15120 and CTM36130), while the definition of holding springs from the circumstance that distributions may include payments otherwise than on share capital, for example, in certain circumstances, loan interest may be a distribution.