is properly attributable to the proportion of the relevant profits represented by the dividendF8, and

does not exceed the amount calculated by applying the formula set out in subsection (1A) below.

the claim may be so framed as to exclude such amounts of underlying tax as may be specified for the purpose in the claim; and

any amounts of underlying tax so excluded shall be left out of account for the purposes of this section.

if the dividend is paid for a specified period, the profits of that period; F10and

F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

if the dividend is F12not paid for a specified period, the profits of the last period for which accounts of the body corporate were made up which ended before the dividend became payable.

drawn up in accordance with the law of the company’s home State, and

making no provision for reserves, bad debts F17, impairment losses or contingencies other than such as is required to be made under that law.

any United Kingdom income tax or corporation tax payable by the overseas company in respect of its profits; and

any tax which, under the law of any other territory, is payable by the overseas company in respect of its profits.

it is resident in the United Kingdom; or

it is resident outside the United Kingdom but the dividend mentioned in subsection (1) above forms part of the profits of a F23permanent establishment of the company’s in the United Kingdom.

if the overseas company and the third company are not resident in the same territory; or

if the overseas company is an ADP controlled foreign company as respects any of its accounting periods and the dividend mentioned in subsection (1) above is an ADP dividend of that company (in which case see also subsection (2B)); or

in such other cases as may be prescribed by regulations made by the Treasury.

no tax shall be taken into account in respect of a dividend paid by a company resident in the United Kingdom except United Kingdom corporation tax and any tax for which that company is entitled to credit under this Part; and

no tax shall be taken into account in respect of a dividend paid by a company resident outside the United Kingdom to another such company unless it could have been taken into account under the other provisions of this Part had the other company been resident in the United Kingdom.

controls directly or indirectly, or

is a subsidiary of a company which controls directly or indirectly,

a controlled foreign company is an “ADP controlled foreign company” as respects any of its accounting periods if, by virtue only of section 748(1)(a), no apportionment under section 747(3) falls to be made as respects that accounting period;

an “ADP dividend” of a controlled foreign company is a dividend by virtue of which the controlled foreign company is an ADP controlled foreign company as respects any of its accounting periods.

F36 a company (“the claimant company”) makes a claim for an allowance by way of credit in accordance with this Part;

the claim relates to underlying tax on a dividend paid to that company by a company resident outside the United Kingdom (“the overseas company”);

the whole or any part of the amount in respect of the high rate tax which is or is included in the underlying tax would not be, or be included in, that underlying tax but for the existence of, or for there having been, an avoidance scheme.

falls within subsection (7) below; and

is a scheme or arrangement the purpose, or one of the main purposes, of which is to have an amount of underlying tax taken into account on a claim for an allowance by way of credit in accordance with this Part.

F37the claimant company, a company related to that company or a person connected with F37the claimant company; and

a person who was not under the control of F37the claimant company at any time before the doing of anything as part of, or in pursuance of, the scheme or arrangement.

any time when that company would have been taken (in accordance with section 416) to have had control of that person for the purposes of Part XI;

any time when that company would have been so taken if that section applied (with the necessary modifications) in the case of partnerships and unincorporated associations as it applies in the case of companies; and

any time when that person acted in relation to that scheme or arrangement, or any proposal for it, either directly or indirectly under the direction of that company.

a company (“company A”) resident outside the United Kingdom has paid tax under the law of a territory outside the United Kingdom in respect of any of its profits;

some or all of those profits become profits of another company resident outside the United Kingdom (“company B”) otherwise than by virtue of the payment of a dividend to company B; and

company B pays a dividend out of those profits to another company (“company C”), wherever resident.

by any company resident outside the United Kingdom (whether or not company B),

to a company resident in the United Kingdom,

by virtue only of section 748(1)(a), no apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company; and

one or more of the dividends paid by the controlled foreign company by virtue of which the condition in paragraph (a) above is satisfied are dividends falling within subsection (2) below.

an initial dividend is paid to a company resident outside the United Kingdom, and

that company, or any other company which is related to it, pays an intermediate dividend which for the purposes of paragraph 4 of Schedule 25 to any extent represents that initial dividend,

that, instead of the intermediate dividend, the dividends described in subsection (5) below had been paid and the circumstances had been as described in subsection (6) or (7) below, as the case may be; and

that any tax paid under the law of any territory in respect of the intermediate dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).

as respects each of the initial dividends which are, for the purposes of paragraph 4 of Schedule 25, to any extent represented by the intermediate dividend, a separate dividend (an “ADP dividend”) representing, and of an amount equal to, so much of that initial dividend as is for those purposes represented by the intermediate dividend; and

a further separate dividend (a “residual dividend”) representing, and of an amount equal to, the remainder (if any) of the intermediate dividend.

that dividend is paid to a United Kingdom resident, or

if it is not so paid, a dividend which to any extent represents it is paid by a company which is related to that company and resident outside the United Kingdom to a United Kingdom resident,

that the relevant profits out of which the independent dividend is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid; and

that any tax paid under the law of any territory in respect of the independent dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).

a controlled foreign company is an “ADP controlled foreign company" as respects any of its accounting periods if the condition in paragraph (a) of subsection (1) above is satisfied as respects that accounting period;

an “initial dividend" (subject to subsection (14) below) is any of the dividends mentioned in paragraph (b) of subsection (1) above paid by an ADP controlled foreign company; and

a “subsequent dividend” is any dividend which, in relation to one or more initial dividends, is the subsequent dividend for the purposes of paragraph 4 of Schedule 25.

one company pays a dividend (“dividend A”) to another company, and

that other company, or a company which is related to it, pays a dividend (“dividend B”) to another company,

by virtue of which (whether taken alone or with other dividends) the condition in subsection (1)(a) above is satisfied as regards an accounting period of the company, but

which also for the purposes of paragraph 4 of Schedule 25 to any extent represents one or more initial dividends paid by other ADP controlled foreign companies,

a bank or a company connected with a bank makes a claim for an allowance by way of credit in accordance with this Chapter; and

the claim relates to underlying tax on a dividend F29 (“the overseas dividend") paid by the overseas company, within the meaning of section 801; and

that underlying tax is or includes tax payable under the law of a territory outside the United Kingdom on or by reference to F30interest or dividends earned or received in the course of its business by that overseas company or by such third, fourth or successive company as is referred to in subsection (2) or (3) of that section; and

if the company which received the interest or dividends (“the company") had been resident in the United Kingdom, F34section 798A would apply in relation to that company.

a company is (within the meaning of section 801) an ADP controlled foreign company as respects any of its accounting periods, and

the whole or any part of the profits or gains of that accounting period are included in the aggregate profits, or aggregate profits or gains, mentioned in subsection (1) above,

the non-resident companies, taken together, were a single company,

anything done by or in relation to any of the non-resident companies (including the payment of the dividend) were done by or in relation to that single company, and

that single company were related to the recipient company, if that one of the non-resident companies which actually pays the dividend is related to the recipient company,

controls directly or indirectly, or

is a subsidiary of a company which controls directly or indirectly,