Section 931J | Schemes involving manipulation of controlled company rules

(1)This section applies to a dividend that would, apart from this section, fall into an exempt class by virtue of section 931E.

(2)The dividend does not fall into an exempt class by virtue of that section if—

(a)the dividend is paid as part of a scheme the main purpose, or one of the main purposes, of which is to secure that dividends of the payer received by the recipient fall into an exempt class by virtue of that section, and

(b)the following condition is met.

(3)The condition is that the dividend is paid in respect of pre-control profits.

(4)A dividend that falls into an exempt class otherwise than by virtue of section 931E is for the purposes of this section treated, so far as possible, as paid in respect of profits other than pre-control profits.

(5)Any other dividend is for the purposes of this section treated, so far as possible, as paid in respect of pre-control profits.

(6)In this section “pre-control profits” means any profits available for distribution at the time the dividend is paid that arose at a time when neither condition A nor condition B in section 931E was met.

(7)Where—

(a)the condition in subsection (2)(a) is met, and

(b)by virtue of subsection (5) part of a dividend is treated as paid in respect of pre-control profits and part is treated as paid in respect of profits other than pre-control profits,

the two parts are treated for the purposes of this Part and Part 2 of TIOPA 2010 (double taxation relief) as separate dividends.