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HMRC internal manual

International Manual

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Controlled Foreign Companies: Assumed Taxable Total Profits, Assumed Total Profits and the Corporation Tax Assumptions: Tax Advantages

CTA10/S1139 defines the expression “tax advantage” for the purposes of the Corporation Tax Acts which apply the section. Section 1139(2)(da) includes within that definition the avoidance or reduction of a charge or assessment to a charge under TIOPA10/Part 9A.

TIOPA10/S371SO applies where there is an arrangement or other conduct whose purpose is to obtain such a tax advantage under CTA10/S1139(2)(da) by obtaining, by any means, what would be a tax advantage within CTA10/S1139(2)(a) to (d) if the corporation tax assumptions (apart from section 371SO) were applied.

If TIOPA2010/Part 9A/S371SO applies, the Corporation Tax Acts are assumed to apply to the arrangement or other conduct in the same way as they would if the purpose of obtaining the tax advantage under section CTA10/S1139(2)(da) were the purpose of obtaining an actual tax advantage within the meaning of section 1139(2)(a) to (d) by the means in question. This links the reduction or prevention of a CFC charge to the definition of “tax advantage” arising to a UK company for the purposes of computing the CFC’s assumed taxable total profits.