The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The CFC rules as outlined in this note apply to accounting periods beginning on or after 1 January 2013, the date upon which significant changes made by Finance Act 2012 became effective.
From this date, the CFC rules also apply to foreign branches in respect of which an exemption election has been made.
The rules are complex and this guidance note outlines the main provisions only.
HMRC guidance on the CFC regime is available at INTM190000 onwards.
A CFC is any company which is resident outside the UK, but ‘controlled’ by a UK resident person or persons (which can include companies and individuals). UK resident persons control a company if they have the power to secure that the affairs of the company are conducted in accordance with their wishes, or if they are entitled to more than 50% of the proceeds on a disposal or a winding up. The definition of control is extended to include certain structures where UK resident persons hold 40% of the rights in the overseas company.
From 1 January 2019, control is further extended to where a UK company together with its associated enterprises holds more than 50% investment in the non-resident company.
There is a targeted anti-avoidance rule which applies where artificial steps have been taken to avoid a subsidiary being controlled from the UK.
The profits of the CFC are then attributed to the UK resident companies (ie the companies only and not the individuals which may be included in the group of UK resident persons for the purposes of the control test) in accordance with their holding of ordinary shares in the CFC (whether direct or indirect). These profits are then subject to an amount of tax equivalent to corporation tax, with a credit for a proportion of any tax paid by the subsidiary.
An attribution of profits is only required if the UK company has an interest of at least 25% in the subsidiary.
Special rules apply to offshore funds, insurance
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Income and gains may be taxable in more than one country. The UK has three ways of ensuring that the individual does not bear a double burden:1)treaty tax relief may reduce or eliminate the double tax 2)if there is no treaty, the individual can claim ‘unilateral’ relief by deducting the foreign tax
Duty to prepare trust accountsUnder the laws of England and Wales, trustees have a duty to account to the beneficiaries for their financial administration of the trust fund. This duty is established by a substantial body of case law. In the case of Armitage v Nurse, Millett LJ stated:“Every
The rent-a-room scheme was introduced in the early 1990s to encourage homeowners to take in lodgers.Fundamentally, the rent-a-room scheme is a relief which means that the rent received by an individual from a lodger (up to a prescribed limit) can be exempt from income tax. If the gross rents are
Employee benefit trusts (EBTs) are commonly used to support employees’ share schemes and to provide other benefits to employees in the form of pensions and bonuses.Their use has been significantly affected by the introduction of the disguised remuneration rules. Although the statutory exclusions
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.