Corporation Tax Act 2009 section 101

Distribution of assets of mutual concerns

Section 101 deals with the tax treatment of distributions received by a company from a mutual concern (such as a mutual insurance company or similar body) when that concern is being wound up or dissolved.

• When a mutual concern is wound up or dissolved, any distribution received by a company that previously made deductible payments to the concern is taxable if the distributed assets represent profits of the mutual business.
• If the recipient company is still trading at the time of the distribution, the amount received is treated as a trading receipt; if it has ceased trading, the amount is treated as a post-cessation receipt.
• Distributions include direct shares of the concern's assets, consideration received under amalgamation or reconstruction schemes, and proceeds from transferring or surrendering the right to such distributions.
• Where a right to receive a distribution is transferred other than at arm's length, the transferring company is deemed to have received consideration equal to the market value of that right.