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HMRC internal manual

International Manual

Controlled Foreign Companies: Computation of Chargeable Profits and Creditable Tax: Close company and group provisions

The close company provisions - ICTA88/SCH24/PARA3

The overseas company is assumed not to be a close company. The cost of benefits provided by the company to a participator cannot therefore be treated as a distribution in accordance with CTA10/S1064 (previously ICTA/S418) and the cost of providing such benefits disallowed as a deduction in computing chargeable profits. The deduction may however be disallowable in accordance with CTA09/S54. 

Group relief - ICTA88/SCH24/PARA5

The company is assumed to be neither a member of a group of companies nor a member of a consortium. Thus it cannot accept losses or other amounts available for surrender under CTA10/S99 (previously ICTA88/S403) which are surrendered to it by an associated company and it cannot surrender its own losses, etc, to such a company. See, however, INTM256100 concerning the reliefs available to a United Kingdom resident company to which a controlled foreign company’s chargeable profits are apportioned.