General approach

HMRC does not interpret the rule as applying where a distribution is paid out of profits that accrue during the time the company making the distribution is owned by the group: ‘post acquisition profits’.

This was made clear in a letter dated 20 September 1985 from the Board to the Institute of Chartered Accountants in England and Wales. The letter dealt with the application of the Ramsay principle to a wide range of commercial situations. It includes the following statement in relation to dividends paid before the sale of a company.

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