capital return - how does it work?, page-9

To contribute my understanding: RCO recently did a capital return.

I haven't declared it on my tax return as it is a 'capital return' ie money contributed by the sharegholders when the company was established. RCO said they had asked for a ruling from the tax office: nothing has turned up, yet. But (IMO) it will be ok. It is a small company that recently 'raised' capital; so it will be easy to 'identify' the funds/capital that was contributed by the shareholders.

So, 'capital' returned is actually (in the first instance) the money raised from the original shareholders to establish the company. When this money is returned it is not taxable as it is the shareholders own money. Over time a company increaases it's capital by retaining funds that could otherwise be distributed to the shareholders. This is the limit of my 'understanding' about capital. This is a simple view of a newly established company. It is only my understanding; ( I like it when other posters say 'DYOR' )

HC42