407. Exemption of distributions received by small companies.

A dividend or other distribution1 of a company2 that is received in an accounting period3 of the recipient4 in which the recipient is a small company5 is exempt if:

  1.  

    (1)     the payer6 is a resident7 of (and only of) the United Kingdom8 or a qualifying territory9 at the time the distribution is received;

  2.  

    (2)     the distribution is not of a specified kind10 in respect of non-commercial or special securities;

  3.  

    (3)     no deduction is allowed to a resident of any territory outside the United Kingdom under the law of that territory in respect of the distribution; and

  4.  

    (4)     the distribution