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HMRC internal manual

International Manual

Controlled Foreign Companies: legislation - introduction and outline: Relief against double charge: subsequent dividends

Where a controlled foreign company pays a dividend to a United Kingdom company the dividend is taxable as overseas income. Where the dividend is paid out of profits which have been the subject of a Chapter IV assessment, a double charge to tax arises. The double charge is mitigated by treating the Chapter IV tax as underlying tax creditable against the liability on the dividend except to the extent that it has otherwise been relieved. Full details are given at INTM256230 to INTM256220.