Commentary

D4.436 Relevant interests in a CFC

Corporate tax
Corporate tax | Commentary

D4.436 Relevant interests in a CFC

Corporate tax | Commentary

D4.436 Relevant interests in a CFC

The purpose of this relevant interest rule is to work out which UK persons have an interest in a CFC and how much that interest is. The chargeable profits of a CFC are apportioned between the relevant interest holders provided they are UK resident companies and hold a certain proportion of the total interest in that CFC1.

A UK resident company's interest in a CFC is a 'relevant interest' provided it is not an indirect interest (ie not held through another UK resident company)2. So, for example if two UK companies have an interest in a CFC because one holds the shares directly and the other holds the shares in that UK company only the first UK company will hold the relevant interest. This ensures that the relevant interest is held by the UK resident company that is at the bottom of a chain of two or more UK resident companies.

The interests of a person related to the UK chargeable company (D4.439) are also relevant interests unless the

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