Corporation Tax Act 2010 section 1020

Transfers of assets or liabilities treated as distributions

Section 1020 deals with how transfers of assets or liabilities between a company and its members may be treated as distributions for corporation tax purposes, and how the amount of any such distribution is calculated.

• When assets or liabilities are transferred between a company and its members, and the member receives a benefit exceeding any new consideration they provide, the excess is treated as a distribution by the company.
• The value of the benefit received and any consideration given are both determined by reference to market value.
• The distribution treatment does not apply where the transfer already falls within the rules on distributions representing repayment of share capital (paragraph B of section 1000).
• Further exceptions to this treatment are set out in section 1021.