Corporation Tax Act 2010 section 269ZWA

Increase of deductions allowance for insolvent companies

Section 269ZWA provides for an increase in the deductions allowance available to companies that have gone into insolvent liquidation, to ensure that chargeable gains realised during the winding-up period can be offset by previously accrued allowable losses.

• A company in insolvent liquidation (or an equivalent overseas situation) receives an increased deductions allowance for each winding-up accounting period, calculated as the lower of its net chargeable gains for the period or its unused brought-forward allowable losses.
• Certain chargeable gains are excluded from the calculation: gains on assets transferred into the company on a no-gain-no-loss basis from a solvent group company during the winding-up period, and gains reallocated to the company by election from a solvent group member, are both ignored — though allowable losses from those transactions still count.
• A company is treated as having gone into insolvent liquidation if it enters liquidation at a time when its assets are insufficient to meet its debts, other liabilities and the expenses of the winding up.
• A winding-up accounting period means the accounting period that begins when the winding up starts and every subsequent accounting period thereafter.