Tax credits on overseas dividends?
Currently the recipient of a UK dividend is entitled to a notional tax credit to set against the tax due on that dividend. Recipients of dividends from non-UK companies are entitled to no such credit.
Significantly, the court in the Meilicke case has restricted the use of temporal limitation powers which open the door for other similar cases. As yet there has not been a case by a UK taxpayer but it must just be a matter of when rather than if.
HM Revenue & Customs have yet to comment on the case but they remained silent on the Manninen case. The CIOT even went as far as making a request under the Freedom of Information Act to find out the Revenue’s policy on Manninen.
Date: 7th March, 2007
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