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HMRC internal manual

International Manual

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HM Revenue & Customs
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Controlled Foreign Companies: guidance relating to superseded legislation

Lower level of taxation: accounting periods straddling 16 March 1993

FA93/S119It is necessary to look at the tax a company pays under the law of its territory of residence to decide if that company is subject to a lower level of taxation. From 16 March 1993 this must be less than 75% of the corresponding United Kingdom tax. Before that date the figure was 50%.

There is a rule for an accounting period that straddles 16 March 1993. It applies if the company would not have been subject to a lower level of taxation before that because of the 50% limit. The rule deems the accounting period to end on 15 March 1993 and a new one to begin on 16 March 1993. The new 75% limit applies to the new accounting period.

It may be that a company is already subject to a lower level of taxation using the old 50% limit. In that case, there is no need to change the accounting period.