CTM15300 - Distributions: general: disapplication of the distribution provisions
ICTA88/S209 (5) & (6)
Each disapply the distributions provisions, but in very different circumstances.
ICTA88/S209 (5) says that ICTA88/S209 (4) does not apply where:
- the company and the member receiving the benefit of the transaction are both UK resident companies which are bodies corporate and either,
- the company giving the benefit is a subsidiary of the recipient, or
- both companies are subsidiaries of a third UK resident company.
Any amount that would be a distribution but for ICTA88/S209 (5) cannot be a distribution under ICTA88/S209 (2) (b).
In the Noved case (SC3081/2005) the Special Commissioners noted that Section 209 (5) contemplates an overlap between subsections (2) (b) and (4).
ICTA88/S209 (6) prevents certain transactions being distributions under either ICTA88/S209 (2)(b) or (4). It applies to transfers of assets (other than cash), or of liabilities, between companies where
- both are UK residents, neither of which is a 51% subsidiary (ICTA88/S838 (1)) of a non-UK resident company,
- the two companies are not under common control (ICTA88/S416), either at the time of the transfer or as a result of it.