The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
In certain circumstances, the statutory demerger route may not be available. For example:
the company does not have sufficient distributable reserves
there are plans to sell the demerged business or businesses
the business that is being demerged is not a trading business
In such cases, there are two alternative non-statutory procedures for carrying out the demerger. One is set out in Insolvency Act 1986, s 110, and is often referred to as a ‘s 110 demerger’ or ‘liquidation demerger’. The second is through a reduction in the company’s share capital, known as a demerger by way of a Companies Act reconstruction or a ‘capital reduction demerger’. This guidance note provides an introduction to liquidation demergers.
Broadly, this involves the company that is to be demerged being put into liquidation and then its assets distributed to new companies set up by the shareholders. This procedure may be used to transfer either shares in a subsidiary or trade and assets to different shareholders. In terms of non-statutory demerger options, liquidation demergers are less popular than capital reduction demergers due to the practical and perceived effects on the group’s reputation and ongoing business of being placed into liquidation and also the relatively straightforward company law procedure for carrying out a reduction of share capital for private companies with a capital reduction demerger. Ther
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
There are several sets of provisions in the Taxes Acts which relate to ‘close’ companies, most of which are anti-avoidance measures aiming to catch transactions between those companies affected and their owners, where there may otherwise be a tax advantage. Broadly speaking, most owner-managed or
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are
Many people work from home either on an informal or a full-time basis. These people can be employed or self-employed, and their employment status affects the expenses they can claim as a deduction from their earnings.When dealing with someone working from home, it is important to remind him that
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.