Section 1086 | Chargeable payments connected with exempt distributions

(1)This section applies if a chargeable payment is made within 5 years after an exempt distribution.

(2)The amount or value of the payment is chargeable—

(a)to income tax, or

(b)to corporation tax under the charge to corporation tax on income.

(3)An amount charged to income tax under subsection (2) is treated for income tax purposes as an amount of income.

(4)Income tax under subsection (2) is charged on the full amount or value of the payment made in the tax year.

(5)The person liable for any income tax charged under subsection (2) is the person receiving or entitled to the payment.

(6)References in this section and sections 1087 to 1094 to a payment include—

(a)the assumption of a liability, and

(b)any other transfer of money's worth.