Taxes Consolidation Act 1997 section 147

Distributions

Section 147 streams a manufacturing company's distributions between profits that have borne the reduced 10% corporation tax rate and other profits, with the manufacturing-streamed portion (the "relevant distribution") carrying a reduced one-eighteenth tax credit in the shareholder's hands.

• Splits each distribution into a relevant portion (derived from manufacturing-relieved profits) and a non-relevant balance using a statutory fraction.
• Allocates distributions made on or after 6 April 1989 to the most recent accounting period, with any excess cascading back to earlier periods.
• Fixes the tax credit on the relevant portion at one-eighteenth of the distribution, reflecting the lower underlying corporation tax burden.
• Empowers the inspector to assess the company on any excess tax credit shown on dividend warrants and to obtain information under penalty of £1,200.

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