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No ESCape

28 September 2010 / Mark McLaughlin CTA (Fellow)
Issue: 4274 / Categories: Comment & Analysis , Companies
MARK MCLAUGHLIN asks whether HMRC’s misgivings about giving legislative effect to extra statutory concession C16 are justified


  • The purpose of ESC C16.
  • HMRC’s concerns on legislating ESC C16.
  • Can these concerns be addressed by anti-avoidance rules?
  • Would a targeted anti-avoidance rule be appropriate?
  • Time to resolve difficulties and place the concession on a statutory footing.

Some extra statutory concessions (ESCs) are used more frequently than others but I expect that ESC C16 is among the most common. The text of ESC C16 broadly allows distributions to shareholders by a company that has ceased business and is awaiting dissolution to be treated as made in a formal winding up if certain conditions are satisfied and assurances given to HMRC.

For tax purposes the distributions are treated as capital distributions within TCGA 1992 s 122 as opposed to income...

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