UK company distributions received by non-resident companies do
not constitute franked investment income (see
CTM34230) and are specifically excluded
from the income of a branch or agency (see (b) of
CTM34210). In principle, they are within
the charge to IT at the lower rate (basic rate prior to 1993-94)
only. But, since they carry no tax credits and assessments at lower
rate (basic rate prior to 1993-94) are forbidden by ICTA88/S233
(1)(a) in respect of distributions other than FID, this liability
has no practical consequence. In practice, liability should not be
sought in respect of FID received. A non-qualifying distribution is
neither income nor franked investment income in the hands of the
non-resident company.
As regards cases covered by Double Taxation Agreements see
INTM153110.
