Part 15Transactions in securities

Circumstances in which corporation tax advantages obtained or obtainable

741Abnormal dividends: the excessive return condition

1

The excessive return condition is that the dividend substantially exceeds a normal return on the consideration provided by the recipient for the relevant securities.

2

In this section “the relevant securities” means-

a

the securities in respect of which the dividend was received, and

b

if those securities are derived from securities previously acquired by the recipient, the securities that were previously acquired.

3

In determining whether an amount received by way of dividend exceeds a normal return, regard must be had—

a

to the length of time before its receipt that the recipient first acquired any of the relevant securities, and

b

to any dividends paid and other distributions made in respect of them during that time.

4

If—

a

the consideration provided by the recipient for any of the relevant securities exceeded their market value at the time the recipient acquired them, or

b

no consideration was so provided,

for the purposes of subsection (1) consideration equal to that market value is taken to have been so provided.