Section 741 — Corporation Tax Act 2010: Abnormal dividends: the excessive return condition

Abnormal dividends: the excessive return condition 741 1 The excessive return condition is that the dividend substantially exceeds a normal return on the consideration provided by the recipient for the relevant securities.

2 In this section “ the relevant securities ” means- a the securities in respect of which the dividend was received, and b if those securities are derived from securities previously acquired by the recipient, the securities that were previously acquired.

3 In determining whether an amount received by way of dividend exceeds a normal return, regard must be had—

a to the length of time before its receipt that the recipient first acquired any of the relevant securities, and b to any dividends paid and other distributions made in respect of them during that time.

4 If—

a the consideration provided by the recipient for any of the relevant securities exceeded their market value at the time the recipient acquired them, or b no consideration was so provided, for the purposes of subsection (1) consideration equal to that market value is taken to have been so provided.