Definition of ordinary share capital and fixed rate shares

The Chartered Institute of Taxation (CIOT) has sent a submission to HMRC seeking clarification as to their definition of ordinary share capital with respect to fixed rate shares. Previously, HMRC’s manuals had stated that shares with a non-cumulative fixed rate dividend would qualify as such, but the current position appears to be that any type of fixed-rate share would not.

HMRC’s subsequent response confirmed that: whether shares are cumulative or not has no bearing on whether they carry a dividend at a fixed rate, and that part of HMRC’s guidance had not been correctly updated following the Warshaw case.