Double Taxation Relief for companies - mixer cap
The measure
Legislation is to be introduced to address a technical problem with the operation of the mixer cap in relation to dividends received in periods straddling last year's corporation tax rate change. Currently there is a mismatch in that foreign dividends received by large companies after 1 April 2008, but in accounting periods straddling that date, would suffer tax at a blended effective rate somewhere between 28% and 30%, whereas the 'mixer cap' used in the double tax relief calculations would be 28%. This measure had been previously flagged up by HMRC.
Who will be affected?
Companies claiming credit relief in relation to foreign dividends received after 1 April 2008 in accounting periods straddling that date.
When?
The measure will have retrospective effect from 1 April 2008.
This measure aims to address a specific unintended consequence of the current law and as such is welcomed.
