INTM255410 - Controlled Foreign Companies: exemptions - the motive test: Application of motive test: Venture Capital Limited Partnerships

Before the rules for ‘control’ were changed in FA00, where, throughout an accounting period, a non-resident company fell within the control requirement for a controlled foreign company at ICTA88/S747(1)(b) solely as a result of the attribution rules for associates in ICTA88/S416(6), and those associates are limited partners in a partnership which was:

  1. established under the Limited Partnership Act 1907, and
  2. complies with the 1987 statement approved by the then Inland Revenue with the British Venture Capital Association on the use of unlimited partnerships as venture capital investment funds,

then the motive test applied to that company provided the partners were not otherwise associated under ICTA88/S417(3).

Following the changes made in FA00, this application of the motive test is no longer relevant as it is not possible for a United Kingdom Venture Capital Limited Partnership to fall within the new control requirement for controlled foreign companies solely on the basis of the new attribution rules.