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Withdrawal of Extra-Statutory Concession C16 (ESC 16)

The Government has introduced new legislation into the Corporation Tax Acts covering Extra-Statutory Concession C16 (ESC C16) which took effect on 1 March 2012.

Previously, with the prior consent of HMRC, distributions to shareholders as part of an informal winding-up prior to a company being struck off the Companies Register, were taxed as a capital receipt. The new Order [1] caps the limit of total distributions which can be treated as such at £25,000.

Readers will recall that the Treasury Solicitor’s office withdrew its guidelines [2] in October 2011 relating to their recovery of assets with a value of less than £4,000 following the dissolution of a company. The message is clear; the Government requires a formal process to be followed for companies which have created value but have come to the end of their life. Companies will have to be placed into liquidation when the remaining assets exceed £25,000 if the shareholders wish to have the distribution of retained profits taxed as a capital receipt.

If you require further information or wish to discuss these issues, please do not hesitate to contact us.

Steve Smith is a Restructuring & Insolvency partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Steve you can call him on 01727 869141 or email at





Date: 19th March, 2012
Author: Steve Smith


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