Section 787 — Corporation Tax Act 2009: Company ceasing to be member of group because of exempt distribution

Company ceasing to be member of group because of exempt distribution 787 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 section 1076 or 1077 of CTA 2010 (distributions involving shares in 75% subsidiaries), and “ chargeable payment ” has the meaning given in 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.