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Extra Statutory Concession C16 - Practical Issues

A client of ours has sold the goodwill and assets out of the company and we have confirmation from the Revenue that the final dividend from the company can be treated as a capital distribution in accordance with ESC C16. The question relates to practical issues.
-Presumably a standard dividend voucher is issued showing the net dividend and the tax credit?
-Is it correct that the capital gain computation is based on the actual net dividend received?
-Presumably the tax credit is just ignored in the calculations in these circumstances?
sharon clipperton


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19th Feb 2002 09:05

No dividend voucher
Dear Sharon,

The effect of ESC C16 is to treat the amount paid to shareholders in your scenario as not being a "qualifying distribution", and so no dividend voucher should be prepared. There is no tax credit to the shareholders, and they take the net amount received as capital proceeds, as if the company were being formally liquidated.


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