VCM15090 - Investee companies: effect of receivership

ICTA/S293 (4A) & (4B); ITA/S182(1) & (2); ITA/S292

FA00/SCH15/PARA24

When a company goes into administration or receivership its directors lose most of their powers. The person who is able to exercise those powers (usually an 'administrative receiver') may act in a way which would cause the company to cease to satisfy one or more of the conditions - for example, they may have to sell the company's assets, with the result that the company is unable to carry on a trade.

With effect from 21 March 2000, any failure to satisfy a requirement which is due entirely to the company's having been put into administration or receivership is to be ignored, provided everything done as a consequence of that is done for commercial reasons and is not part of a scheme or arrangement aimed at avoiding tax.