Section 1020 Transfers of assets or liabilities treated as distributions

United Kingdom

(1)

This section applies if on a transfer of assets or liabilities—

(a)

by a company to its members, or

(b)

to a company by its members,

the amount or value of the benefit received by a member exceeds the amount or value of any new consideration given by the member.

(2)

The company is treated for the purposes of the Corporation Tax Acts as making a distribution to the member of an amount equal to the excess.

F1...

F2(2A)

But the company is not treated as making a distribution under subsection (2) if the transfer of assets or liabilities—

(a)

is a distribution by virtue of paragraph B in section 1000(1), or

(b)

would be such a distribution in the absence of sub-paragraph (a) of that paragraph (distribution representing repayment of capital on the shares).

(3)

For the purposes of subsection (1) the amount or value of a benefit, or of any consideration, is determined in accordance with the market value.

Annotations

F1: Words in s. 1020(2) omitted (with effect in accordance with s. 33(6) of the amending Act) by virtue of Finance Act 2012 (c. 14), s. 33(3)(a)
F2: S. 1020(2A) inserted (with effect in accordance with s. 33(6) of the amending Act) by Finance Act 2012 (c. 14), s. 33(3)(b)

C1: Pt. 23 applied (with modifications) by 2003 c. 1, s. 554AC(3) (as inserted (with effect in accordance with Sch. 1 para. 14 of the amending Act) by Finance Act 2018 (c. 3), Sch. 1 para. 2)