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HMRC internal manual

International Manual

Controlled Foreign Companies: Relevant Interests in a CFC: Whether a person has a Relevant Interest

In order to determine whether a person has a relevant interest in a CFC it must first be determined whether they have any interest at all. Whether a person has an interest in a CFC is determined by application of TIOPA10/S371VH. For detail on this see INTM248500.

TIOPA10/S371OA determines whether an interest held, following application of TIOPA10/S371VH, is a relevant interest. There are a number of rules to determine whether a person has a “relevant interest” in the CFC concerned for the accounting period of the CFC. The rule(s) to be applied will depend on the residence and nature of the entity and its relationship to others who may also potentially have a relevant interest in the CFC.

Direct and indirect interests

In considering whether a person has a relevant interest it will also be necessary to consider whether the interest held is “direct” or “indirect”. An indirect interest in a CFC exists where a person has an interest by virtue of having an interest in another company. It follows that a person who has an interest in a CFC other than through another company has a direct interest in that CFC.