Commentary

D5.156 Non-small company distribution exemption—transactions not designed to reduce tax

Corporate tax
Corporate tax | Commentary

D5.156 Non-small company distribution exemption—transactions not designed to reduce tax

Corporate tax | Commentary

D5.156 Non-small company distribution exemption—transactions not designed to reduce tax

Distributions will be exempt if they fall within one or more of the five exempt classes as summarised in D5.152, one of these is where the distribution is in respect of distributions derived from transactions not designed to reduce tax1.

A distribution falls into this exempt class if it is paid in respect of 'relevant profits'. Relevant profits are any profits available for distribution at the time the distribution is paid other than profits which are herein described as 'tainted profits'. Tainted profits arise from a transaction (or series of transactions) which achieve a reduction in UK tax (see below), which is not negligible, and the purpose, or one of the main purposes, of the transaction was to achieve that reduction2.

Negligible is not defined in the legislation but HMRC have provided guidance in relation to the small company distribution exemption which notes that the

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial