Particular topics: company winding up etc.: distributions
If a company is being wound up, there can be no distributions in respect of share capital – CTA10/S1030 although there can still be distributions in respect of:
|certain transfers of assets and liabilities between it and its member and||CTM15250|
|Shares where the ‘phoenixism’ TAAR applies||CTM36300 onwards|
|in the case of a close company, the provision of benefits to a participator or an associate of a participator under CTA10/S1064.||CTM60500 onwards|
But the normal pro rata distribution of the net assets of a company (or their realisation proceeds) to shareholders on a winding-up is not a distribution within CTA10/PART23, even though the net assets may well include accumulated net profits of the company – CTA10/S1030. This type of distribution is instead a ‘capital distribution’ for the purposes of TCGA92/S122 (see CG57810 onwards).
The term ‘winding up’ in CTA10/S1030 is not an exclusive reference to winding up under UK company law, although any process under foreign law must be of analogous character. Any cases where the winding-up exclusion is said to apply to a process under the law of another country should be submitted to BAI (Technical) – see ‘CT&BIT Technical Help’ – with a detailed analysis of the process of ‘winding up’ in that country and evidence that the company is, indeed, undergoing this process. Written evidence from the ‘liquidator’ is to be preferred but there may be circumstances where this is unavailable or inappropriate in which case it is up to the company to provide sufficient evidence.