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If a company transfers an asset or liability at other than market value this may have tax implications quite apart from the distributions provisions.

For example, the disposal of trading stock other than in the course of trade is subject to the Petrotim Securities Ltd v Ayres (see BIM33610) principle.聽 Another example is TIOPA10/PART4 that can apply to sales between associated persons.

A transaction between a company and a member that is to the member's advantage or benefit can result in both

• a Corporation Tax (CT) liability on the company, and
• a liability on the company and member in respect of the distribution.

This is consistent with the rule that:

• a company pays CT on its profits with no deduction for distributions, and
• the distribution carries its own tax consequences on the member.

As an example, a company worth 拢100,000 might transfer trading stock worth 拢10,000 to a member for 拢4,000.聽 The company is then worth 拢94,000, and has effectively distributed 拢6,000 to the member.聽 The Petrotim adjustment increases the company's profits by 拢6,000, which is the difference between the open market value of the stock and the price paid by the member.聽 The distribution of 拢6,000, which is the value the member has withdrawn from the company, is caught by CTA10/S1000 (1) G.