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HMRC internal manual

International Exchange of Information Manual

From
HM Revenue & Customs
Updated
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Notification Requirement: Controlled parties overseas: Control

Notification Requirement: Controlled parties overseas: Control

Control takes the meaning in section 1124 of the Corporation Tax Act 2010.  That is the power to ensure that the affairs of the overseas person are conducted in accordance with the UK corporate’s wishes, either:

  • By means of the holding of shares or the possession of voting power in relation to that or any other body corporate, or
  • As a result of any powers conferred by the articles of association or other document regulating that or any other body corporate.

In relation to a partnership, “control” means the right to a share of more than half the assets, or of more than half the income, of the partnership.

Where an overseas person and a UK Specified Financial Institution or Specified Relevant Person are under common control with an overseas person, the obligation will not be passed on to the overseas person (unless the party in common control is also a UK Specified Financial Institution or Specified Relevant Person).

Any penalty for not complying with the obligation will still fall on the UK controlling party, where it is apparent that they have not taken all steps reasonably open to them.  There is further guidance on penalties [IEIM609000].

The UK person must take reasonable steps, and if the laws or regulations in the country the overseas person is based in restrict them from complying, then the UK person cannot expect them to comply and no penalty will be charged.