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HMRC internal manual

International Manual

UK residents with foreign income or gains: dividends: Underlying tax - dividend resolutions

Dividend resolutions may not be produced for a group of companies to which the consolidation provisions of TIOPA10/S71 apply (see INTM164150). We will accept a resolution or minute of the Board or shareholders of the company, prepared at the time the dividend was voted, stating that the dividend is paid out of the profits of the relevant accounting period of the group. The documentation must relate to the company paying the dividend (rather than the recipient). Where the company has more than one shareholder (for example, joint venture arrangements), the specification must apply to dividends paid to all shareholders. If there are separate classes of share, different specifications may be made in respect of the dividends paid on those different classes of share.

For dividends paid to the UK prior to 31 March 2001 it was possible for a company to specify that a dividend was paid out of specified profits or for a specified period. For dividends paid to the UK on or after that date ICTA88/S799(3) (now TIOPA10/S59(4) & (5)) has been amended so that it is only now possible to specify a period. A further dividend may be paid out of a source where a previous dividend has been specified. To avoid double or zero counting the residue of profits and tax remaining in the company will normally be taken as the new starting point for calculating the rate, (see INTM164150).

The same will apply if a further dividend is paid out of a source that was not treated on a consolidated basis before ICTA88/S803A (now TIOPA10/S71) came into force.