A Ltd traded for many years, and accumulated significant cash. In March 2016 subject to a detailed SPA it sold its entire undertaking other than accumulated cash but including all receivables, to an unconnected company B Ltd.
A Ltd was then put into Members Voluntary liquidation, and the accumulated cash paid to the members of A Ltd before 6th April 2016
In the event over the following years those receivables[including for example rates recoverable ] realised considerably more than the figures listed in the SPA and were collected by the liquidator of A Ltd
How is the surplus - arising out of the terms of the SPA and now payable by the liquidator of A Ltd to B Ltd - taxable in the hands of B Ltd?
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Replies (5)
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Assuming you have in mind CTA 2009 Part 3, Chapter 15, that refers to post cessation receipts - in this case it is A Ltd which ceased trading, but the query relates to B Ltd.
If all receivables were transferred to B how come the cash ended up in the hands of the liquidator of A? Or is A acting as collection on behalf of B?
There was no novation of the receivables , so the liquidator of A Ltd pursued the recovery with the obligation to account to B Ltd,.
So why did you say that A transferred the entire undertaking, including all receivables?
In any event, I would suggest that B simply reflects the over-recovery as a trading receipt. In the same way that one would treat recovery of a debt against which a bad debt provision had previously been made. And vice versa of course, if the receipt proves to be less than the receivable acquired.
BTW, you need to correct your sub-heading