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HMRC internal manual

Company Taxation Manual

Particular topics: dividend-stripping: exempt bodies: relevant profits

The profits earned between the date of acquisition and the date on which the distribution was made (‘the relevant profits’) are to be computed on a commercial basis after allowing proper provision for CT. CG and losses (whether or not arising after the date of acquisition) are excluded from the computation. Profits arising in part of an accounting period are allocated on a time apportionment basis except where there is another method that is ‘fair and reasonable’.