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HMRC internal manual

International Manual

From
HM Revenue & Customs
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UK residents with foreign income or gains: dividends: Unilateral relief - underlying tax

TIOPA10/S12 & S14 gives unilateral relief for underlying tax to a company which controls directly or indirectly or is a subsidiary of a company which controls directly or indirectly not less than 10 per cent of the voting power in the foreign company paying the dividend.

In certain circumstances companies whose direct or indirect control of the foreign company paying the dividend is reduced below 10 per cent may claim underlying relief. Broadly at least 10% must have been controlled before 1st April 1972 in that company or another company involved in a share exchange. Detailed instructions are given in INTM167430 onwards.

Where a country operates a `company tax deducted’ (see INTM164010 paragraph (e)) system, for example Jersey or Guernsey, see INTM164070 regarding allowance of relief prior to the issue of Statement of practice SP12/93 and subsequently.

Where the credit Article in a double taxation agreement requires a UK company to control more than 10 per cent of the voting power in the foreign company paying the dividend (for example, the UK/Germany agreement requires control of 25 per cent of the voting power) TIOPA10/S14 means that relief for the underlying tax is available unilaterally if the control is 10 per cent or more (see INTM164060 and INTM164440).