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HMRC internal manual

International Manual

Controlled Foreign Companies: apportionment of chargeable profits and creditable tax: Interaction with ICTA88/S739

ICTA88/S747 (4)(b) ICTA 1988

There is a special provision to prevent a double charge to tax arising under both Chapter IV and ITA07/Part 13/Chapter 2 (transfers of income abroad) in respect of the same amount of profits. If any sum forming part of a controlled foreign company’s chargeable profits would be treated as the income of an individual then an amount is left out of account for ITA07/Part 13/Chapter 2 purposes. The amount disregarded is the sum which corresponds to the portion of the chargeable profits apportioned to United Kingdom resident companies and giving rise to an assessment under Chapter IV. Chargeable profits which are apportioned but which do not give rise to a Chapter IV charge (for example, because less than 25% of the profits have been apportioned to a particular company) are not therefore outside the scope of ITA07/Part 13/Chapter 2.