CTM17310 - Distributions: demergers: liquidation reconstruction


It is possible for a company to carry out a demerger without incurring a distributions liability. It can do so by taking advantage of CTA10/S1030. This excludes from the scope of CTA10/PART23 any distribution made in respect of share capital in a winding up.

For example, the company may:

  • form two or more subsidiaries,


  • transfer a trade to each subsidiary in exchange for shares,


  • put the original company into liquidation,


  • in the course of the liquidation distribute the shares in the new subsidiaries to the original shareholders.

CTA10/S1030 removes the distribution from the scope of the CT distributions legislation, so CTA10/S1075 cannot apply.