Commentary

D4.915 The mixer cap

Corporate tax
Corporate tax | Commentary

D4.915 The mixer cap

Corporate tax | Commentary

Restrictions on underlying tax

FA 2009 introduced the exempt distribution regime which broadly provides that most dividends received by a UK company on or after 1 July 2009 (from the UK or overseas) will be exempt from corporation tax (see Division D5.1). The provisions discussed in this article apply to overseas dividends received on or after 1 July 2009 that are not exempt and all other overseas dividends received before 1 July 2009.

D4.915 The mixer cap

FA 2000 introduced the mixer cap concept to limit offshore mixing by imposing restrictions on the availability of underlying tax relief. The mixer cap is based on the concept originally contained in other anti-avoidance provisions (see D4.940). The following paragraphs cover the mixer cap provisions in detail. While some tax planning involving mixer companies will remain possible following these changes, it is now severely limited. However, some of the remaining planning concepts are discussed at D4.916, D4.922.

It is important to note that for dividends paid before 1 July 2009, the calculations to establish any underlying tax restrictions on the payment of a foreign dividend to the UK formed part of the initial calculations to ascertain whether there was a potential liability to UK tax. The onshore pooling provisions then operated to identify whether a taxable foreign dividend could be pooled with other foreign dividends. These rules also established whether it was possible to utilise any unrelieved foreign tax that had arisen as a result of the mixer cap. The detailed rules as to

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