Revenue blasted over special tax dividends

Revenue blasted over special tax dividends

Accountants have widely condemned an unexpected Government clampdown on share buy-backs and special dividend schemes to exempt tax-payers.

The Inland Revenue announced on Tuesday that tax-exempt investors, including pension funds, could no longer claim tax credits under schemes designed to distribute profits to shareholders.

Price Waterhouse tax partner John Whiting said: ‘What is surprising and unfair is the timing. It affects distributions on or after Tuesday. Companies such as Reuters and SHV and Calor made announcements this week on the understanding of the law as it previously stood.’

KPMG partner Robert Turnbull added: ‘Special dividends not connected to the alteration of share capital or take-overs will not be affected.

This will affect investment decisions of tax-exempt fund managers. Now it has created a level playing field for investments, will funds continue to target shares that are expected to provide these sort of tax benefits?’

Ernst & Young partner Roger Muray said: ‘The measures should affect those paying special dividends connected with reorganisation, take-over situations where bidders offer to pay dividends out of the target companies’ reserves, and share buy-backs where companies buy shares back from shareholders at more than the issue price, effectively creating a dividend for tax purposes.’

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

2m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

3m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

4m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

4m

Related Articles

Boris Johnson’s tax cut: Would it work?

Brexit Boris Johnson’s tax cut: Would it work?

2w Dave Beach
What’s yours is mine –Joint property and Form 17

Personal Tax What’s yours is mine –Joint property and Form 17

7m Helen Thornley, ATT Technical Officer
Supreme Court rules against Pimlico Plumbers in landmark employment case

Legal Supreme Court rules against Pimlico Plumbers in landmark employment case

1y Alia Shoaib, Reporter
Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

Personal Tax Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

1y Alia Shoaib, Reporter
Rent-a-room relief – the survey says…

Personal Tax Rent-a-room relief – the survey says…

1y Helen Thornley, ATT Technical Officer
What should the OTS prioritise in its review of inheritance tax?

Personal Tax What should the OTS prioritise in its review of inheritance tax?

1y Alia Shoaib, Reporter
LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

2y Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2y Emma Smith, Managing Editor