Income Tax Act 2007 section 837D

Transfer of rights to payment

Section 837D deals with the tax treatment when a company in winding up, or its liquidator, sells the right to receive money from its deposit-taking business to another person.

• If a company or its liquidator sells the right to receive a sum that would otherwise be a winding up receipt, this section applies to bring that transfer into the tax charge.
• Where the sale is conducted at arm's length, the consideration received for the transfer is treated as a winding up receipt from the deposit-taking business.
• Where the sale is not at arm's length, the market value of the right transferred (as if the parties were independent) is treated as a winding up receipt instead of the actual consideration.
• The effect is to ensure that transferring the right to future income does not allow the company to escape the tax charge that would have applied had it collected the money itself.