Ken Moody highlights some confusion over what exactly are ‘distributions in specie’ and outlines some important tax implications.
I was asked a question recently about a transfer of shares between a 60% subsidiary to its holding company and whether this would be better structured as a dividend in specie or a distribution in specie. I was initially thrown by the question; surely, they are the same thing? Of course, from a corporation tax point of view, it makes little odds since what some of us still call ‘Schedule F’ income is exempted by (CTA 2009, s 931B).
What’s the difference?
I then ‘got it’ that the reference to a ‘dividend in specie’ was to a dividend declared in cash which is satisfied by the transfer of an asset. This is permitted by Article 34 (‘Non-cash distributions’) of The Companies (Model Articles)
