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HMRC internal manual

International Manual

Distribution exemption: Exemption for small companies: outline

The conditions to be satisfied

A distribution received by a small company is exempt provided that four conditions are satisfied (CTA09/S931B). The conditions are:

  • The paying company is resident in either the UK or in a qualifying territory (see INTM652020), and is not also dual resident.
  • The distribution must not be an amount, typically of interest, that is deemed by CTA10/S1000(1) E and F to be a distribution for tax purposes (see INTM655070).
  • A deduction is not allowed to any foreign resident in accordance with any foreign tax law in respect of the distribution.
  • The distribution is not paid as part of a tax advantage scheme (see INTM652040)

The meaning of “small company” is given by CTA09/S931S (see INTM652060).