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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Substantial shareholdings exemption: the substantial shareholding requirement - effect of liquidation

TCGA92/SCH7AC/PARA16

Paragraph 16 Schedule 7AC TCGA 1992 applies where the investing company, or a member of its group, is in liquidation. It makes it clear that although the assets of a company in liquidation vest in the liquidator the company is still, for the purposes of establishing whether the substantial shareholding requirement is met, treated as the beneficial owner of those assets.

So in the example at CG53074, if the subsidiary company went into liquidation then, for the purposes of Part 2 of Schedule 7AC,

  • it would continue to be treated as if it were the beneficial owner of the shares it held,
  • it would continue to be treated as if it were entitled to the distributable profits and assets that went with those shares,
  • it would continue to be treated as if it held the holding company’s shares, and enjoyed the rights attached to those shares, and
  • the holding company would continue to be treated as if it held the subsidiary’s shares, and enjoyed the rights attached to those shares.