F1Part 9ACompany distributions
Chapter 3Exemption of distributions received by companies that are not small
Exempt classes
931HDividends derived from transactions not designed to reduce tax
(1)
A dividend falls into an exempt class if it is paid in respect of relevant profits.
(2)
In this section “relevant profits” means any profits available for distribution at the time that the dividend is paid, other than profits that reflect the results of a transaction, or of one or more of a series of transactions, where—
(a)
the transaction or series of transactions achieve a reduction (other than a negligible reduction) in United Kingdom tax, and
(b)
the purpose or one of the main purposes of that transaction or series of transactions is to achieve that reduction.
(3)
A dividend that falls into an exempt class otherwise than by virtue of this section is for the purposes of this section treated, so far as possible, as paid in respect of relevant profits.
(4)
Any other dividend is for the purposes of this section treated, so far as possible, as paid in respect of profits other than relevant profits.
(5)
Where by virtue of subsection (4) part of a dividend is treated as paid in respect of relevant profits and part is treated as paid in respect of profits other than relevant profits, the two parts are treated for the purposes of this Part and Part 18 of ICTA (double taxation relief) as separate dividends.