Finance (No. 3) Act 2010

Distributions giving rise to deemed disposals

4 (1) TCGA 1992 is amended as follows.

(2) In section 22 (disposal where capital sums derived from assets), after subsection (3), insert—

“(4) Subsection (1) does not apply where a company receives, or becomes entitled to receive—

(a) a capital distribution within the meaning of section 122 (see instead subsection (1) of that section), or

(b) a distribution to which the charge to corporation tax on income under Part 9A of CTA 2009 (company distributions) applies or would apply were the distribution not exempt for the purposes of that Part.”

(3) In section 122 (deemed disposal on receipt of certain distributions), after subsection (5) insert—

“(6) The reference in subsection (5)(b) to a distribution which in the hands of the recipient constitutes income for the purposes of income tax includes, where the recipient is a company, a distribution to which the charge to corporation tax on income under Part 9A of CTA 2009 (company distributions) would apply were the distribution not exempt for the purposes of that Part.”