CheckLists.Tax (beta)
B2. Sale etc. by a company
INCOME TAX
Trading income
- Identifying trading receipts
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Sale to shareholder
- Sale at undervalue giving rise to distribution
General rule
- Sale at undervalue by UK resident company to member is a deemed distribution (CTA 2010, s.1000(1)(G)).
Reversal of inadvertent distribution
- HMRC accept that if there was no intention to make a distribution + the parties made reasonable efforts to avoid one, an inadvertent distribution may be reversed.
- Two methods:
(1) Member agrees to pay the difference.
(2) Transaction reversed entirely.
- Further conditions explained at CTM15295, including the need to have obtained independent valuation.
Legislation: CTA 2010, s.1000(1)(G);
Cases:
HMRC manuals: CTM15295;
Commentary:
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Transfer of assets abroad
- Disposal of asset to non-resident person by closely held company as a relevant transfer
- The TOAA rules apply to a relevant transfer by a closely-held company in which an individual has a qualifying interest (ITA s.720A).
- Only applies to income arising on or after 6 April 2024 (FA 2024, s.22(10)).
- See further i1. Creation and addition to trust.
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CAPITAL GAINS TAX
Non-resident company gains attributed to participators
- Settlor attribution: gains of company in which trust is a participator where trust is settlor interested
- The gains that are attributed to the settlor under s.86 include gains of companies in which the trustees are participators which fall to be attributed to the trustees under s.3 (Schedule 5, para 1(3)).
- Only applies where the trustees are "participators in a company in respect of property which originates from the settlor".
Legislation: TCGA, Schedule 5;
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