(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.
But this is subject to section 1021.
(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.
(1)Section 1020 does not apply if—
(a)the company and the member receiving the benefit are both UK resident, and
(b)either—
(i)the company is a 51% subsidiary of the member, or
(ii)both are 51% subsidiaries of a third company which is also UK resident.
(2)In determining whether one body corporate is a 51% subsidiary of another body corporate (“A”) for the purposes of subsection (1), A is treated as not being the owner of—
(a)any share capital which it owns directly in a body corporate as trading stock,
(b)any share capital which it owns indirectly, and which is owned directly by a body corporate as trading stock, or
(c)any share capital which it owns directly or indirectly in a body corporate which is not UK resident.
(3)For the purposes of subsection (2) share capital owned by a body corporate is owned as trading stock if (and only if) a profit on the sale of the shares would be treated as a trading receipt of the body's trade.
(4)No transfer of assets (other than cash) or of liabilities between one company and another constitutes, or is treated as giving rise to, a distribution by virtue of section 1020 if—
(a)both the companies are UK resident,
(b)neither of them is a 51% subsidiary of a non-UK resident company, and
(c)they are not under common control, either at the time of the transfer or as a result of it.
(5)In this section—
“under common control” means under the control of the same person or persons, and
“control” has the same meaning as in Part 10 (see sections 450 and 451).