Tax on dividends from a foreign, tax resident in the UK company

Good morning, For the situation described below, could you please advise on the following 2 scenarios: situation: A company C is incorporated in a country A, outside of the UK. The company C is tax resident in the UK. The company C pays out dividends. A shareholder S is the UK tax resident and is eligible for remittance basis. scenario 1: The shareholder S receives their dividends from the company C to their bank account in a country B, outside of the UK. The shareholder S claims remittance basis and never brings the monies to the UK or use it in or for any benefit related to the UK. Please confirm that that no tax is due in the UK on that dividend payment because S claimed remittance basis and never remitted money or any goods or services derived from these funds. scenario 2: The shareholder S doesn't claim remittance basis, receives dividends into their British bank account. Naturally, tax is due in the UK. Could you please advise if in the Self Assessment it should be reported under the UK section “Interest and dividends from UK banks and building societies” because the company C is tax resident in the UK or under “Dividends from foreign companies” because the company is incorporated in the country A, outside of the UK.

Hi John TheKind,
1. As claiming the remittance basis and the income is not remitted to the UK, this doesnt need to be declared. see guidance here:
Paying tax on the remittance basis (Self Assessment helpsheet HS264)
2. It will be UK interest/dividends.
Thnak you.
 

Thank you for your response. Just wanted to double-check on the scenario 1: It means that the fact that the company is located overseas prevails the fact that it's tax resident in the UK and hence there's no tax liability in the UK on dividends, provided remittance basis is claimed and the dividend is never remitted to the UK. Please confirm that my understanding is correct.

Hi John TheKind,
You are correct,
Thank you. 

Thank you for the confirmation. Could you please let me know if the same holds, i.e. no tax liability in the UK on dividends, in scenario 1 if the company C pays out the dividend from a UK bank account.

Hi,

This would be UK income and if not UK resident would be classed as disregarded income.

Thank you.

Thank you for your answer. The shareholder S described in the first message is not exactly "not UK resident". The shareholder S is the UK tax resident by the virtue of passing Statutory Residence Test by testing positive on Automatic UK Test, however he does claim remittence basis. Could you please clarify if under these circumstances any tax in the UK is liable on such dividends.

Hi Ieatcottagepies,
HMRC cannot comment on future events as legislation and/or plans may change.
If you qualify for split year then you only report any foreign income for the UK part of the year:
RDRM12000 - Residence: The SRT: Split year treatment: Contents.
If you do not qualify then you will need to report all your foreign income to the UK
Tax on foreign income
The guidance at
RDRM12150 - Residence: The SRT: Split year treatment: Case 4: Starting to have a home in the UK only
Will help you work out if split year treatment applies.
Please also refer to guidance here:
Self Assessment tax returns.
Thank you 

 

Hi John TheKind,
Please refer to:
Paying tax on the remittance basis (Self Assessment helpsheet HS264)
Thank you.