Mr. Jim Callaghan
asked the Chancellor of the Exchequer whether a shareholder who waives his right to a dividend is liable to capital transfer tax; and whether he will make a statement.
§ Mr. Joel Barnett
During the debates on the autumn Finance Bill assurances were given that a dividend waiver would not normally give rise to a capital transfer tax liability although it was recognised that there were circumstances in which possibly a liability could be incurred. My right hon. Friend is considering whether legislation should be included in the 1976 Finance Bill to clarify the position. In the meantime the Inland Revenue will not in any case seek to raise a charge to capital transfer tax where a binding waiver of a dividend is made within 12 months before the dividend is declared or in the case of an interim dividend within 12 months before it is paid.