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HMRC internal manual

International Manual

HM Revenue & Customs
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UK residents with foreign income or gains: dividends: Dividends received by UK companies on or after 31 March 2001: eligible unrelieved foreign tax - group surrender

The legislation relating to onshore pooling was repealed for distributions paid on or after 1 July 2009.

Eligible Unrelieved Foreign Tax (EUFT) can be surrendered within a group. Two companies are deemed to be members of the same group if one is a 75% subsidiary of the other or both are 75% subsidiaries of a third company. The Regulations (SI 2001/1163) do not apply to consortium companies. The companies must be in the same group throughout the surrendering company’s accounting period in which the EUFT available for surrender arises.

A company can only surrender any EUFT arising in a year (including EUFT brought forward) that remains after it has fully utilised its EUFT in the current or previous years or, if it chooses not to utilise the EUFT in this way, the amount that would have remained had it done so. A company can surrender EUFT brought forward as the amount is treated as arising in the later period.

A claimant company can claim all or part of the amount of any available EUFT from the surrendering company. The EUFT will then be treated as the claimant company’s own EUFT for all purposes.

To accommodate the position when group companies’ accounts are not coterminous, the surrendered tax is treated as if it arose on a dividend received by the claimant company and the dividend is treated as arising in that one of the claimant company’s accounting periods in which falls the last day of the surrendering company’s accounting period.

A dual resident company may surrender foreign tax to another company in the same group as from 5th December 2001.

The time limit for claim and surrender is the same as for all claims to utilise EUFT. The normal time limits relating to the amending of a company’s tax return do not apply to making or withdrawing a claim for EUFT.

There are special rules relating to companies carrying on life assurance business, which are covered in Chapter 14A of the Life Assurance Manual.

The CT return CT600 provides a section to surrender and claim EUFT within a group. Any problems in interpretation should be referred to Business International, Outward Investment team.