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HMRC internal manual

General Insurance Manual

Double taxation relief: underlying tax on dividends referable to an overseas branch: accounting periods beginning before 1 April 2000: section 802 ICTA and Extra-Statutory Concession C1(b)


ESCC1 (b) relates to dividends received by a United Kingdom insurance company in respect of which credit for underlying tax can be given by virtue of ICTA88/S802. It extends the statutory relief (which is confined to tax paid on its profits by the overseas company paying the dividend) so as to take into account any United Kingdom or overseas tax charged on the profits of any other company which pays a dividend to and is resident in the same territory as the overseas company. If that other company in turn receives a dividend from a third company resident in the same territory, the tax underlying that dividend is similarly taken into account; and so on as regards any further dividends arising in that same territory. It therefore extends the scope of underlying tax within section 802 down the chain of dividends.

The dividends qualifying for relief under section 802 are subject to an overriding limit – see GIM12130. Where that limitation is effective, the company selects the dividends to be treated as falling within the qualifying total and it is only in relation to those dividends that the concessional extension of Section 802 applies.