Recovery of CT from shareholders: example
A Ltd disposes of an asset for £100,000 giving rise to a chargeable gain of £50,000.
The tax on the gain is £12,000, but the company did not pay this within six months of theappropriate date.
The company, in the course of a members’ voluntary liquidation, uses £94,000 of the£100,000 received (its total assets) to pay off creditors.
Mrs X held one-third of the total issued share capital and received a capital distributionof £2,000 in respect of her shares out of a total capital distribution of £6,000.
Mrs X should be assessed within two years of the appropriate date (in the name of thecompany) to an amount of Corporation Tax equal to the lower of
- the value of the distribution received - £2,000
- one-third of the Corporation Tax due on the chargeable gain (Mrs X received one- third of the capital distribution) - £4,000.