Targeted anti-avoidance rules (TAARs) which aim to combat cases of 'phoenixism' apply to certain distributions made in the process of winding up companies on or after 6 April 2016.
The term 'phoenixism' typically refers to the scenario where a company is liquidated and subsequently its business is carried on under the same or broadly the same ownership via a new entity. This may be for commercial / legal reasons or to achieve a tax saving from obtaining capital rather than income treatment on company reserves. Discussion of the legal issues of such an arrangement is outside the scope of this guidance.
For distributions made before the TAAR came into effect on 6 April 2016, 'phoenix' arrangements may have been caught in any case by the Transactions in Securities (TiS) legislation in certain circumstances. This is discussed further below under Treatment of distributions made in certain liquidations pre-6 April 2016.