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HMRC internal manual

Capital Gains Manual

Administration: insolvency: more than one distribution

There is often more than one distribution during the course of winding up a company.Each distribution represents a part-disposal by the shareholder of the shares in thecompany (see CG57826 for instructions on part-disposals). In such a case, where the sharesof the company are unquoted at the date of the first or later distribution, an Inspectorshould accept any valuation from a taxpayer or agent of the residual value of the sharesat the date of the particular distribution for use in the part-disposal formula, providedthat

  • the valuation appears reasonable, and
  • the liquidation is expected to be completed within two years of the first distribution (and does not in fact extend much beyond that period).

The valuation need not include a discount for deferment. If the distributions arecompleted before the chargeable gains are assessed, it should be accepted that theresidual value of the shares in relation to a particular distribution is equal to theactual amount of all subsequent distributions.