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HMRC internal manual

International Manual

HM Revenue & Customs
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Controlled Foreign Companies: Management and collection of a CFC charge and reliefs available against a CFC charge: Application of the Taxes Acts to the CFC charge

How the Taxes Acts are to be applied to the CFC charge is set out in TIOPA10/S371UB.

The CFC charge is charged on a chargeable company as a sum equal to corporation tax charged at the appropriate rate on the chargeable profits apportioned to the chargeable company as stated at Step 5 of TIOPA10/S371BC(1). TIOPA10/S371UB makes it clear that this means all enactments that apply generally to corporation tax also apply to a CFC charge subject to the provisions of the Taxes Acts and any necessary modifications.

The enactments referred to above specifically include:

  • those relating to returns of information and the supply of accounts, statements and reports,
  • those relating to the assessing, collecting and receiving of corporation tax,
  • those conferring or regulating a right of appeal, and
  • those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.

In particular any reference to “corporation tax” in TMA 1970 includes a sum charged at step 5 of TIOPA10/S371BC(1) as if it were an amount of corporation tax and any reference to “profits of a company” includes the percentage of a CFC’s chargeable profits for an accounting period charged on a chargeable company at step 5 in TIOPA10/S371BC(1).

The statutory provisions on claims and elections required to be made in a company’s tax return (Para 10, Schedule 18 of Finance Act 1998) and those that can be made outside a return (Schedule 1A, of TMA 1970) however do not apply to an election under TIOPA10/S371TB(8) (election to determine the territory in which a CFC is resident).