Commentary

D6.711 Liquidation—capital gain implications

Corporate tax
Corporate tax | Commentary

D6.711 Liquidation—capital gain implications

Corporate tax | Commentary

D6.711 Liquidation—capital gain implications

Intra-group transactions

Although the beneficial ownership of the assets of a company in liquidation is vested in the insolvency practitioner upon commencement of the liquidation, for the purposes of tax on chargeable gains, the company is not regarded as having disposed of, or deemed to have disposed of, its assets when the liquidation commences. Where the assets of a company are vested in the liquidator1, it is specifically provided that the transactions of the liquidator are to be regarded as the transactions of the company and that transactions between them are to be disregarded2. In this regard TCGA 1992, s 170(11) expressly provides that the mere passing of a winding-up resolution does not cause the distressed company to leave the group for chargeable gains tax purposes. As a result, the mere commencement of an insolvency proceeding does not break up the corporate group for chargeable gains purposes and the assets of the company may still be transferred on a no gain/no loss basis before completion of the winding up3.

Degrouping

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