Part 23 U.K.Company distributions

Chapter 2 U.K.Matters which are distributions

Distributions, other than dividends, in respect of shares U.K.

1002 Exceptions for certain transfers of assets or liabilities between a company and its members U.K.

(1) No transfer of assets (other than cash) or of liabilities between one company and another constitutes, or is treated as giving rise to, a distribution by virtue of paragraph B in section 1000(1) if—

(a) both the companies are UK resident,

(b) neither of them is a 51% subsidiary of a non-UK resident company, and

(c) the two companies are not under common control, either at the time of the transfer or as a result of it.

(2) Subsection (3) applies if—

(a) on a transfer of [F1 assets (other than cash) or of ] liabilities by a company to its members, or to a company by its members, a member receives a benefit,

(b) the conditions in section 1021(1)(a) and (b) are met, and

(c) if those conditions were not met, an amount would be a distribution under section 1020(2) (transfers of assets or liabilities treated as distributions).

(3) The amount mentioned in subsection (2)(c) is not a distribution by virtue of paragraph B in section 1000(1).

(4) In this section—

• “under common control” means under the control of the same person or persons, and

• “control” has the same meaning as in Part 10 (see sections 450 and 451).

Textual Amendments

F1 Words in s. 1002(2)(a) substituted (with effect in accordance with Sch. 3 paras. 5, 7 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 3 para. 1(2)