Taxation on US shares (Dr Pepper merger)

Andy57

For those who wanted to know the outcome of my dealings with HMRC and the DPS 'Special Dividend'

Recap - I filled out my Self-Assessment details (Online) for 2018-2019 in November 2019. I did not put any details about my DPS ‘Special Dividend’. Instead, I added an ‘other details’ comment to the online form stating that I had written a separate, detailed letter to HMRC about this Special Dividend, including my calculation for the CGT I thought I owed.
In January 2020 I called HMRC to find out what was going on and the guy said my letter was still being processed. He advised me to make a payment anyway (before 31st Jan deadline) which I duly did. In the meantime, my Self-Assessment details were ‘on hold’.
In April 2020 I finally received an answer from HMRC – here is the exact wording:-

Thank you for your letter dated 1 November 2019. I apologise for the long delay in replying.
I have reviewed your letter and my opinion is that the merger payment element of the 'special dividend' payment is a capital distribution as a result of the merger between Dr Pepper Snapple and Keurig Green Mountain.

Therefore, this payment should be treated under the Capital Gains Tax rules.

Please amend your 2018/19 Self Assessment tax return to reflect this in the capital gains section. This will then calculate the amount due.

The letter was signed by an HMRC ‘Technical Support Inspector’

Note
As I suspected, this is a Capital Gains Issue and only on the 'merger' part of the Special Dividend. The other part (An ordinary dividend payment to which withholding tax was applied and dealt with by ‘Double Taxation Treaty’) was processed as normal.


I therefore added a CGT section to my 2018-2019 Self-Assessment details, generating a calculation for the amount due - which was less than the payment I’d already made so I’m expecting a refund.