The court considered whether corporation tax had to be paid as an expense of the liquidation in priority to other claims. In that case it had arisen not on profits but on chargeable gains, on sales of the company’s properties after the commencement of the winding up.
Held: ‘section 243(2) of the Income and Corporation Taxes Act 1970 [now section 8(2) of the 1988 Act] expressly enacts that a company is chargeable to corporation tax on a capital gain arising in the winding up. It follows that the tax is a charge which the liquidator is bound to discharge by payment to the extent that assets are available. It is, therefore, to my mind, beyond argument that the payment of the tax is a ‘necessary disbursement’ of the liquidator and must come within the fifth paragraph of rule 195(1) . . ‘
Judges:
Brightman J
Citations:
[1979] 1 WLR 558
Statutes:
Income and Corporation Taxes Act 1988 8(2)
Jurisdiction:
England and Wales
Cited by:
Approved – Kahn and Another v Commissioners of Inland Revenue; In re Toshoku Finance plc HL 20-Feb-2002
A company went into liquidation, being owed substantial sums by another company in the same group, but itself insolvent. A settlement did not include accrued interest, but was claimed to be taxed as if it had, and on an accruals basis. If so, was . .
Appeal from – In re Mesco Properties Ltd CA 1980
Tax legislation provided that the company was chargeable to corporation tax on a capital gain arising in the winding up.
Held: The appeal failed. It was a tax which the liquidator was bound to discharge by payment, and the payment was a . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Corporation Tax
Updated: 16 May 2022; Ref: scu.182552