Corporation Tax Act 2009

787 Company ceasing to be member of group because of exempt distribution U.K.

(1) Sections 780 and 785 do not apply if a company ceases to be a member of a group just because of an exempt distribution, unless subsection (2) applies.

(2) This subsection applies if there is a chargeable payment within 5 years after the making of the exempt distribution.

(3) If subsection (2) applies, all such adjustments as may be required, by way of assessment, amendment of returns or otherwise, may be made within the period of 3 years after the making of the chargeable payment.

(4) Those adjustments may be made despite any time limit on the making of an assessment or the amendment of a return.

(5) In this section—

• “exempt distribution” means a distribution that is exempt because of [F1 section 1076 or 1077 of CTA 2010] (distributions involving shares in 75% subsidiaries), and

• “chargeable payment” has the meaning given in [F2 section 1088(1) of CTA 2010].

(6) Subsections (7) and (8) apply for determining for the purposes of this section whether one company is a 75% subsidiary of another company.

(7) The other company is treated as not being the owner of any share capital that it owns directly in a body corporate if a profit on a sale of the shares would be treated as a trading receipt of its trade.

(8) The other company is treated as not being the owner of any share capital that—

(a) it owns indirectly, and

(b) is owned directly by a body corporate for which a profit on the sale of the shares would be a trading receipt.

Textual Amendments

F1 Words in s. 787(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 651(a) (with Sch. 2)

F2 Words in s. 787(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 651(b) (with Sch. 2)

Modifications etc. (not altering text)

C1 Pt. 8 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)