§ Mr. PearsonTo ask the Chancellor of the Exchequer what estimates his Department has made of the cost to the Exchequer from the tax loophole involved in the use of special dividends in takeover bids. [12539]
§ Mr. JackThe payment of a special dividend does not involve a tax loophole. A special dividend carries a tax credit in the same way as an ordinary dividend. This mitigates the double tax charge on distributed profits since tax is payable by the company on the profits out of which the dividend is paid.