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HMRC internal manual

Capital Gains Manual

Close companies: apportionment: general

ICTA88/S423 provides that the undistributed income of a close company shall be apportioned, or notionally distributed, amongst its shareholders. This can give shareholders a higher rate Income Tax liability on income they have not received. Section 423 was repealed for accounting periods which began after 31 March 1989. However, any apportionment made in respect of an earlier accounting period may still affect the Capital Gains Tax computation on a later disposal of the shares. For further instructions on close company apportionment see old CT6750+.