Corporation Tax Act 2009 section 323

Meaning of expressions relating to insolvency etc

Section 323 defines the key insolvency-related terms used in the loan relationships rules that determine when a company is not required to bring a taxable credit into account on the release or modification of a debt.

• A company is unable to pay its debts if it cannot pay them as they fall due, or the value of its assets is less than its liabilities (including contingent and prospective liabilities)
• A company is in insolvent liquidation from the point it enters liquidation with insufficient assets to cover its debts, other liabilities and winding-up expenses, until the winding up is completed or otherwise brought to an end
• A company is in insolvent administration if it entered administration under the relevant insolvency legislation at a time when its assets were insufficient to cover its debts, other liabilities and administration expenses
• A company is in insolvent administrative receivership if an administrative receiver has been appointed and, at the time of that appointment, its assets were insufficient to cover its debts, other liabilities and receivership expenses