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HMRC internal manual

Company Taxation Manual

Particular topics: company dissolution: ESCC16: already dissolved

Where a company has been dissolved:

  1. before assessment, or
  2. before payment of its tax liabilities, or
  3. before arrangements as described in CTM36220 can be made,

the shareholders may be prepared voluntarily to account for tax on CTM36220 lines. Failing this, see INS5108.

If all the following conditions are satisfied, officers may agree to treat distributions made before 1 April 2012 in circumstances described in CTM36205as if they had been made in the course of a winding-up.  They are treated as if a winding-up commenced on the date the company declared its intentions to seek or accept striking off and dissolution, or at an earlier date if the company had then ceased to carry on business and begun to distribute its assets.  CTA10/S1000 (CT distribution treatment) will not then apply to the distribution of assets to shareholders.  But any CGT liability that would arise on such distribution must be paid – it follows that it may not always be in the interest of the company and its members to make this arrangement.  Officers should make it clear to the company that the arrangement is made on the assumption that the company will be struck off and dissolved.  The arrangement may be cancelled, and the full tax charged, if the company is not dissolved (see CTM36240).

The concession is not necessarily refused because not all the conditions are met. Where a company requests concessionary treatment, and the conditions are not all met, submit the case to CTIS (Technical).

These arrangements can also apply to a UK resident company established under a foreign jurisdiction if the company is struck off under provisions similar to Section 652 and Section 652A Companies Act 1985. A claim for the concession to apply in these circumstances should also be submitted to CTIS (Technical) whether or not all the conditions are met.

The conditions are as below.

  1. The company is not one which, if the distributions were made in a winding up, would be reported to the Anti-Avoidance Group, Clearance and Counteraction Team in relation to ITA07/PART13/CHAPTER1 (formerly ICTA88/S703) under sub-paragraphs (e) or (f) of CTM36875.
  2. The company is not the subject of an investigation either on its own or as part of an enquiry embracing individuals or other companies.
  3. The company satisfies an HMRC officer that:
  4. (a) they will supply such information as is necessary to determine, and will pay, any CT liability on income or capital gains, and(b) it intends to collect its debts, pay off its creditors in full and distribute any balance of its assets to its shareholders (or has already done so), and
(c) it intends to seek or accept striking off and dissolution.   5. The company and its shareholders agree that:  
(a) they will supply such information as is necessary to determine, and will pay, any CT liability on income or capital gains and any ACT liability under ICTA88/SCH13 due on distributions made prior to 6 April 1999.  
(b) the shareholders will pay any CGT liability (or CT in the case of a corporate shareholder) in respect of any amount distributed to them in cash or otherwise as if the distributions had been made during a winding-up (see [CG40430]( to [CG40432](