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HMRC internal manual

International Manual

Controlled Foreign Companies: legislation - introduction and outline: Requirements of the legislation

The general scheme of the legislation requires:

  • a computation of the profits (exclusive of capital gains) of a controlled foreign company for an accounting period, broadly on the lines of Corporation Tax profits,
  • an apportionment of the profits among those with an interest in the company, then
  • self assessment to tax by all United Kingdom companies to which 25% or more of the profits have fallen to be apportioned. (Amounts apportioned to associates are taken into account in calculating whether the 25% threshold is passed, but not in calculating the amount of tax due.)