Corporation Tax Act 2010 section 1044

Advance clearance of payments by Commissioners

Section 1044 allows a company to obtain advance clearance from HMRC as to whether or not a payment for the redemption, repayment or purchase of its own shares will be treated as a capital transaction rather than a distribution.

• A company may apply to HMRC for advance clearance before making a payment on the redemption, repayment or purchase of its own shares.
• If HMRC confirm before the payment is made that the capital treatment under section 1033 will apply, the payment is treated accordingly as a capital transaction.
• If HMRC confirm before the payment is made that section 1033 will not apply, the payment is treated as a distribution and taxed on that basis.
• The clearance must be obtained before the payment is actually made — a retrospective application is not effective under this provision.