PART XVIII DOUBLE TAXATION RELIEF

CHAPTER II RULES GOVERNING RELIEF BY WAY OF CREDIT

Foreign dividends: onshore pooling and utilisation of eligible unrelieved foreign tax

806B The amounts that are eligible unrelieved foreign tax.
(1) This section has effect for determining the amounts of eligible unrelieved foreign tax which arise in the cases set out in section 806A(4) and (5).
(2) In Case A, the difference between—
(a) the amount of the credit allowed as mentioned in section 806A(4)(b), and
(b) the greater amount of the credit that would have been so allowed if, for the purposes of subsection (2) of section 797, the rate of corporation tax payable as mentioned in that subsection were the upper percentage,
shall be an amount of eligible unrelieved foreign tax.
(3) In Case B, where the mixer cap restricts the amount of tax to be taken into account as mentioned in section 799(1) in the case of the Case V dividend, the difference, in the case of that dividend, between—
(a) the amount of tax to be taken into account as there mentioned, and
(b) the greater amount of tax that would have been taken into account as there mentioned, had M in the formula in section 799(1A) in its application in the case of that dividend (but not any lower level dividend) been the upper percentage,
shall be an amount of eligible unrelieved foreign tax.
(4) In Case B, where the mixer cap—
(a) restricts the amount of underlying tax that is treated as mentioned in subsection (2) or (3) of section 801 in the case of any dividend received as mentioned in that subsection, but
(b) does not restrict the relevant tax in the case of any higher level dividend,
subsection (5) below shall apply.
(5) Where this subsection applies, an amount equal to the appropriate portion of the difference, in the case of the dividend mentioned in subsection (4)(a) above, between—
(a) the amount of underlying tax treated as mentioned in section 801(2) or (3), as the case may be, and
(b) the greater amount of underlying tax that would have been so treated, had M in the formula in section 799(1A) in its application in the case of that dividend (but not any higher or lower level dividend) been the upper percentage,
shall be an amount of eligible unrelieved foreign tax.
(6) For the purposes of subsection (5) above, the “appropriate portion” of the difference there mentioned in the case of any dividend is found by multiplying the amount of that difference by the product of the reducing fractions for each of the higher level dividends.
(7) For the purposes of subsection (6) above, the “reducing fraction” for any dividend is the fraction—
(a) whose numerator is the amount of the dividend; and
(b) whose denominator is the amount of the relevant profits (within the meaning of section 799(1)) out of which the dividend is paid.
(8) Any reference in this section to any tax being restricted by the mixer cap in the case of any dividend is a reference to that tax being so restricted otherwise than by virtue only of the application of the mixer cap in the case of one or more lower level dividends.
(9) For the purpose of determining the amount described in subsection (2)(b), (3)(b) or (5)(b) above, sections 806C and 806D shall be disregarded.
(10) In this section—
“the Case V dividend” means the dividend mentioned in section 806A(1);
“higher level dividend”, in relation to another dividend, means any dividend—
(a) by which that other dividend is to any extent represented; and
(b) which either is the Case V dividend or is to any extent represented by the Case V dividend;
“lower level dividend”, in relation to another dividend, means any dividend which—
(a) is received as mentioned in section 801(2) or (3); and
(b) is to any extent represented by that other dividend;
“the relevant tax” means—
(a) in the case of the Case V dividend, the foreign tax to be taken into account as mentioned in section 799(1); and
(b) in the case of any other dividend, the amount of underlying tax to be treated as mentioned in section 801(2) or (3) in the case of the dividend.
Ss. 806A-806H, 806J and cross-heading inserted (with effect in accordance with Sch. 30 para. 21(2) of the amending Act) by Finance Act 2000 (c. 17), Sch. 30 para. 21(1)
Pt. 18 Chs. 1, 2 modified (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 277(1), 289 (with ss. 60, 101(1), 171, 201(3))
See 1989 s.115—calculation of tax credit for non-residents on gross amount of distribution.
Pt. 18 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 20 para. 10 (as amended by Finance Act 1995 (c. 4), s. 122(4)(5)) (with Sch. 20 para. 12(2)(a))
Pt. 18 applied (with effect in accordance with Sch. 29 Pt. 14 of the affecting Act) by Finance Act 2002 (c. 23), Sch. 29 para. 87
Pt. 18 modified (22.7.2004) by Finance Act 2004 (c. 12), s. 107(5)
Pt. 18 applied by Finance Act 1996 (c. 8), Sch. 9 para. 12E(5) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(1) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(1))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 1 para. 16)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 26 para. 30E(5) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(1) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(1))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 1 para. 19)
Pt. 18 applied by Finance Act 1996 (c. 8), Sch. 9 para. 12C(3) (as substituted (29.11.2007 with effect in accordance with regs. 1(2), 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 2 para. 8)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 26 para. 30C(3) (as substituted (29.11.2007 with effect in accordance with regs. 1(2), 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 2 para. 10)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 29 para. 87A(3) (as substituted (29.11.2007 with effect in accordance with regs. 1(2), 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 2 para. 12)
Pt. 18 applied by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 140H(3), 140I(3), 140J(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 1)
Pt. 18 applied by Finance Act 1996 (c. 8), Sch. 9 paras. 12H(3), 12I(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 2)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 26 paras. 30G(3), 30H(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 4)
Pt. 18 applied by Finance Act 2002 (c. 23), Sch. 29 paras. 85B(3), 85C(3) (as inserted (29.11.2007 with effect in accordance with regs. 1(2), 3(3) of the amending S.I. (as amended by S.I. 2008/1579, reg. 4(2))) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), Sch. 3 para. 5)
Pt. 18: power to amend conferred (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 533(2)(3) (with Sch. 2 Pts. 1, 2)
Pt. 18 modified (with effect in accordance with s. 56(3) of the modifying Act) by Finance Act 2009 (c. 10), s. 56(1)