Controlled Foreign Companies: Control: Introduction
A CFC is defined as a non-UK resident company which is controlled by a UK resident person or persons (see INTM191100).
Specific rules determine who controls a company for the purposes of establishing whether a non-UK resident company is a CFC. If the person or persons who are found to control the company (having applied the various rules for determining control) are UK resident the company will be a CFC.
In applying the control rules a person is UK resident (subject to the special rules for international joint venture companies) if they are resident in the UK for tax purposes. While an individual is not subject to an apportionment under the CFC rules, they are considered for the purposes of establishing control and thus whether a non-UK resident company is a CFC.
Control can be determined by legal and economic control, (see INTM236200) or by reference to accounting standards (see INTM236400). In addition there are particular rules dealing with banks (see INTM236250), international joint venture companies, whereby a non-UK resident company which would not otherwise be taken to be a CFC is taken to be a CFC (see INTM236275) and cell companies (see INTM236500).
Legal and economic control is not established just by reference to direct shareholdings in a non-UK resident company. The rules look through tiers of shareholding, consider the holdings of associated persons and attribute interests, rights and powers held by certain other persons.
Ultimately, the aim of the rules on control is to establish whether a person (or persons) has the power to ensure that the affairs of a company are carried out in accordance with that person (or persons) wishes.