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HMRC internal manual

International Manual

Controlled Foreign Companies: Management and collection of a CFC charge and reliefs available against a CFC charge: Just and reasonable apportionments

Just and reasonable apportionments

If an apportionment of a CFC’s chargeable profits and creditable tax is to be made in accordance with TIOPA10/S371QC(2) (i.e. determined on a just and reasonable basis), and a company tax return is made or amended using for the apportionment a particular basis adopted by the company making the return, an officer of HMRC may determine that another basis is to be used for the apportionment and that is then taken as the only basis allowed by the Taxes Acts. This is set out at TIOPA10/S371UC(1)&(2).

If an officer of HMRC has determined another basis for the apportionment, this basis can only be questioned on the grounds that it is not a just and reasonable basis for the apportionment. The process for questioning such a determination is by an appeal against an amendment of the company’s tax return made under paragraph 30 or 34 of Schedule 18 to FA 1998. This is set out at TIOPA10/S371UC(3)&(4).