Chapter CTM36125

Published date16 April 2016
Record NumberCTM36125

When winding-up begins, a company loses beneficial interest in and ownership of its assets, although retaining legal title to and possession of them. Assets include shares owned in other companies (see Ayerst v C and K (Construction) Ltd (1974) 50TC651). The effect is that, where the provisions of the Taxes Acts depend on such shareholdings, they can no longer be taken into account when the company owning the shares commences winding-up.

Group elections relating to distributions made and interest or charges paid on or before 11 May 2001 (ICTA88/S247 (1) and ICTA88/S247 (4)) were invalidated when the beneficial ownership of shares on which the election depends is forfeited as a result of winding-up. The commencement of winding-up by one company in a consortium of companies could invalidate an election by another company in the consortium.

By contrast, a company in receivership does retain beneficial ownership of its assets.

Example

The ordinary share capital in Company B is owned by Company N 60 per cent, Company L 20 per cent and Company D 20 per...

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