Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Company Taxation Manual

Particular topics: company winding up etc.: beneficial ownership of shares

When winding-up begins, a company loses beneficial interest in and ownership of its assets, although retaining legal title to and possession of them.  Assets include shares owned in other companies (see Ayerst v C and K (Construction) Ltd (1974) 50TC651).  The effect is that, where the provisions of the Taxes Acts depend on such shareholdings, they can no longer be taken into account when the company owning the shares commences winding-up.

Group elections relating to distributions made and interest or charges paid on or before 11 May 2001 (ICTA88/S247 (1) and ICTA88/S247 (4)) were invalidated when the beneficial ownership of shares on which the election depends is forfeited as a result of winding-up.  The commencement of winding-up by one company in a consortium of companies could invalidate an election by another company in the consortium.

By contrast, a company in receivership does retain beneficial ownership of its assets.


The ordinary share capital in Company B is owned by Company N 60 per cent, Company L 20 per cent and Company D 20 per cent.

If Company N commences winding-up, no consortium elections are valid, as 75 per cent of the share capital is no longer beneficially owned by the companies.

If only Company L commences winding-up, its election with Company B is invalidated.  But, elections by Company N and Company D with Company B are still valid.

As regards chargeable gains, TCGA92/S170 (11) (see CG40400 onwards) applies and TCGA92/S170 (CG45000 onwards) continues to cover the transfer of assets by the liquidator to other group members.