§ Mr. PearsonTo ask the Chancellor of the Exchequer upon what grounds his Department has given clearance under section 703 of the Income and Corporation Taxes Act 1988 for the use of special dividend payments in takeover bids. [24185]
§ Mr. Jack[holding answer 16 April 1996]: Clearance from the anti-avoidance provisions at section 703(a) of the Income and Corporation Taxes Act 1988 in respect of a specified transaction is considered by the Inland Revenue in response to a formal application. Clearance is given only if it is satisfied that the transaction will not give rise to a tax advantage as defined in the Act or that any such tax advantage is an accidental by-product of transactions which have a genuine commercial purpose and that the way in which they have been carried out is not motivated by the wish to obtain a tax advantage.
All applications for clearance, including cases of special dividends in takeover bids, are subject to detailed scrutiny by the Inland Revenue, who decision will be based on the facts and circumstances of the individual case.