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HMRC internal manual

International Manual

HM Revenue & Customs
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DT applications and claims: Types of income: Dividends: direct investors - dividend stripping

What dividend stripping is

Generally, no relief is available if the dividends can only have been paid out of profits earned or other income received by the UK company in a period ended more than 12 months before the date when the claimant acquired a holding of 10% or more of the class of shares on which the dividend is paid. This provision does not apply if the shares were acquired for genuine commercial reasons and not primarily for obtaining the benefit of relief under the Double Taxation Agreement (DTA).

When to make dividend stripping enquiries

The first time that the company claims payment of tax credits.