Taxation in corporate insolvency—the principal issues in outline
Produced in partnership with David L. Irvine of Goodwin , Nathan Langford of Kirkland & Ellis International LLP and Philip Ridgway of Temple Tax Chambers

The following Tax practice note produced in partnership with David L. Irvine of Goodwin, Nathan Langford of Kirkland & Ellis International LLP and Philip Ridgway of Temple Tax Chambers provides comprehensive and up to date legal information covering:

  • Taxation in corporate insolvency—the principal issues in outline
  • Taxation and insolvency
  • Effects on accounting periods
  • Liquidation
  • Administration
  • Administrative receivership/LPA receivership
  • CVAs
  • Non-UK procedures
  • Consequences of accounting periods on the use of tax losses
  • Ability to set trading losses arising on or after 1 April 2017 against capital profits
  • More...

Taxation in corporate insolvency—the principal issues in outline

Taxation and insolvency

There are relatively few specific rules governing the UK taxation of companies that are subject to insolvency procedures. The UK’s basic approach to the taxation of companies in an insolvency process is that the normal tax rules applicable to the particular situation that has arisen should be applied.

One of the consequences of this is that different insolvency procedures often give rise to different UK tax treatments and effects, and so the choice of the procedure adopted is not strictly tax-neutral (although, in practice, tax considerations will rarely determine which procedure is used).

The insolvency procedures considered here are:

  1. liquidation (both compulsory and voluntary) (also referred to as a ‘winding up’)

  2. administration

  3. administrative receivership and fixed charge/Law of Property Act (LPA) receivership, and

  4. to a lesser extent, company voluntary arrangements (CVAs), schemes of arrangement and restructuring plans

It is not uncommon for companies in financial difficulties to be the subject of a court-approved scheme of arrangement under Part 26 of the UK Companies Act 2006 (CA 2006), but since:

  1. there is no need to prove insolvency (and indeed, a scheme of arrangement can be used by solvent companies for a number of reasons, including as a way to structure the takeover of a company), and

  2. the UK tax implications of a scheme of arrangement will depend entirely on

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