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ICTA88/S736 denied a dealing company an allowance for any fall in value below acquisition value of a holding in another UK resident company where that fall in value was attributable to a distribution or distributions made after 29 April 1969 in respect of that holding. »Ê¹ÚÌåÓýapp receipt of the distribution adequately compensated the dealer for the fall in value, and no tax relief was justified.

However, when the provision was introduced in 1960, a dealer in securities was not charged to tax on dividends and could claim any loss on dealing in securities which paid a dividend against (income) tax suffered, or treated as suffered, on the dividend and reclaim it. Shortly after the legislation was introduced the House of Lords held, in a number of cases, that this dividend stripping technique did not work (see, for example, Thomson v Gurneville Securities Ltd (1971) 47TC633). And a dealer in securities became from 1997 liable to tax on dividends received as trading income (F(2)A97/S24).

ICTA88/S736 was repealed by FA08/S66 (1)(d).

Archive guidance paragraphs CTM36710 to CTM36790 are available on request from CTIS (Technical).