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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
, see all updates

Debt cap: particular types of company: industrial and provident societies

Dividends paid by industrial and provident societies

CTA09/S499 treats dividends, bonuses and other sums payable on shareholdings in industrial and provident societies, held for the purposes of a trade or for other purposes as if they were interest arising on a loan relationship. It does not treat the shares themselves as if they were a loan relationship.

TIOPA10/S318A prevents payments treated under CTA09/S499 from being financing expense or financing income. So the recipient should not bring the interest into its debt cap computations as financing income and the payer should not treat the interest as financing expenses.

As the interest does not arise from borrowings it is not included in the available amount either.