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HMRC internal manual

Company Taxation Manual

Particular topics: company winding up etc.: review office

When notification of a winding-up is received, form INSOL 104 is sent to the liquidator. If no reply is received within four weeks of issue, the file is passed to the officer dealing with the accounts of the company in liquidation. The officer should review the file and take any necessary action regarding liability to tax both before and after the relevant date (see INS1580 and INS1612). Where a request for information about directors’ emoluments is received, details should be obtained where necessary and sent to the office dealing with the employment without delay. These are the main points to bear in mind.

  1. Liability in respect of:


  1. trading profits,
  2. interest, rents or other income not subject to tax before receipt,
  3. fees or remuneration paid to directors and employees.


  1. If the liquidator has made distributions and payments of interest etc after the relevant date, returns may be required under ITA07/PART15/CHAPTER15.  Returns may also be required for periods before the relevant date.  If it appears the liquidator is not making returns that may be due, advise the Collector immediately.
  2. The application of CTA10/S940A (company reconstructions without change of ownership - see CTM06000 onwards).
  3. The reason for the liquidation. If there is any possibility that the liquidation is part of a scheme of legal avoidance, make a report of the fact to Anti-Avoidance Group, Clearance and Counteraction Team under (e) of CTM36875.
  4. The appointment of a liquidator, receiver or manager of a company should not be treated as a disposal of assets by the company but a charge to CT on chargeable gains may arise on the disposal of company assets by the liquidator. This applies whether the disposal is by sale or on a distribution to shareholders (see CG40430 onwards). The company assets may, however, be transferred by the liquidator in circumstances that do not give rise to a charge. For example, they may be transferred to a member of a group or under a scheme of arrangement (see CG52500 onwards).

In the case of a voluntary liquidation of a solvent close company or subsidiary company, it may be desirable to tell the office dealing with the shareholders when the liquidation is complete, and also about any capital distributions for consideration of liability to tax on chargeable gains.

  1. The possibility that the sale of the business with assets constitutes a trading transaction.
  2. The loss by the company of its beneficial interest in shares owned in other companies when winding-up commences (see CTM36125).
  3. The effect of liquidation on the spreading of liability to tax on capital sums received in respect of patent rights.

Officers should ask for a copy of the final accounts for the period of liquidation as soon as they find out the winding-up is complete.