CTM17040 - Distributions: stock dividends: returns

CTA10/S1052

A company must make a return to HMRC for any accounting period in which it has issued a stock dividend within 30 days from the end of the return period. For this purpose, a return period begins at the beginning of the accounting period. If one or more quarterly days (31 March, 30 June, 30 September and 31 December) fall within the accounting period (excluding its last day), a return period ends on those days, and a new one begins immediately after. A return period ends on the last day of the accounting period.

The CT101 return form is available from the ‘find a form’ site and requires the following information:

• the date on which the share capital within CTA10/S1049 was issued
• the date on which the company was first required to issue it (if different from the issue date)
• details of the terms on which it was issued, and
• the cash equivalent under ITTOIA05/S412.

The return suggests that to save enquiries the company should give full details of the basis of calculation of the cash equivalent.

HMRC has the power to serve a notice requiring a return to be made where it appears to an officer that the company has failed to make a required return. Notice of at least 30 days must be allowed. The return must be made even if the company has not issued a stock dividend.

HMRC may use further information powers (see CH20000 onwards), but only where needed. Replies to requests for information from the company’s records on behalf of a company member should be limited to a statement of the cash equivalent.

SAIM5070 explains the tax treatment of a stock dividend in the recipient’s hands.