A double tax charge could arise if, for whatever reason, a company makes dividend payments to workers but subsequently treats those payments as deemed employment payments that are within the MSC rules.
Conditions for relief
The MSC may claim relief where all of the following conditions are met (ITEPA 2003, s. 61H):
(1)the MSC is a body corporate;
(2)it is treated as making a deemed employment payment (in any tax year);
(3)it makes a distribution (a ‘relevant distribution’) either in that tax year (whether before or after the payment is made) or in any later tax year; and