CTM60780 | Close companies: close investment holding companies: liquidation

CTA2010/S18N (5)

Where a close company commences liquidation, CTA2010/S18N (5) provides that it is not to be treated as a close investment-holding company (CIC) in the accounting period immediately following the commencement of winding-up if it was not a CIC in the accounting period immediately before liquidation commenced. Accordingly, the company may be entitled to the small profits rate of corporation tax or marginal relief if its profits do not exceed the relevant thresholds - see CTM03905 onwards. In any subsequent accounting period a close company in liquidation will be excluded from being a CIC only if it then meets the usual conditions of Section 18N (2) - see CTM60710. S18N(5) does not apply to companies in administration whose status as a CIC will be determined on the facts in the usual manner.

It may happen that there is a very short gap between the end of a period in which the company was not a CIC and the commencement of winding-up, so that strictly the company will not have the benefit of Section 18N (5). This may cause difficulties in some cases and an undertaking has been given to review the position where a company has not been able to avoid a short gap and would suffer significantly if not given the protection of Section 18N (5).

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