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HMRC internal manual

International Manual

Controlled Foreign Companies carrying on general insurance business: Special rules for an Acceptable Distribution Policy (‘ADP’)

SI1999/1408 Regulation 6 S

Special rules apply where a company using an approved funding method seeks to pursue an acceptable distribution policy. These are:

  • the dividend or dividends for an accounting period are paid within 18 months after the close (or deemed closure) of the underwriting year (or at such later time as the Board may allow), and
  • the amount of the dividend or dividends necessary to show that an ADP has been pursued are to be enhanced (to compensate for any late payment) in accordance with the formula

    D x i/(1 x i)


D is the amount of any dividend that is claimed as part of the ADP for an accounting period, but paid more than 18 months after the end of the period. If there is more than one such dividend the formula is applied to each in turn, and

i is the interest factor calculated on the basis of the overpayment rate for corporation tax. Interest runs from a date 18 months after the end of the relevant accounting period to the date that the dividend is paid.