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HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
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Distribution exemption: Exemption for all other companies: exempt classes

What are the exempt classes?

There are five exempt classes. They are

  • CTA09/S931E: distributions from controlled companies.
  • CTA09/S931F: distributions in respect of non-redeemable ordinary shares.
  • CTA09/S931G: distributions in respect of portfolio holdings.
  • CTA09/S931H: distributions derived from transactions not designed to reduce tax.
  • CTA09/S931I: dividends in respect of shares accounted for as liabilities.

It is sufficient for a distribution to fall within any one of these classes to be exempt, unless an anti-avoidance rule applies.

Four of the anti-avoidance rules (CTA09/S931N to S931Q) can apply to any of the exempt classes. The others (S931J to S931M) are more limited in scope.

  • CTA09/S931J (Schemes involving manipulation of controlled company rules) applies only to distributions which are exempt by reason of S931E and is relevant only to that exempt class.
  • CTA09/S931K (Schemes involving quasi-preference or quasi-redeemable shares) applies only to distributions which are exempt by reason of S931F and is relevant only to that exempt class.
  • CTA09/S931L (Schemes involving manipulation of portfolio holdings rule) applies only to distributions which are exempt by reason of S931G and is relevant only to that exempt class.
  • CTA09/S931M (Schemes in the nature of loan relationships) cannot apply to distributions that fall within S931E.