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HMRC internal manual

International Manual

Controlled Foreign Companies: EEA states - deduction for net economic value against apportionment: Procedures and process


Form, content and procedure for applications under ICTA88/S751A

Applications should be made in writing, to HMRC’s Outward Investment Team at the address given at INTM256090. The Commissioners of HM Revenue & Customs will need to review the information listed in INTM256090 in order to consider whether the controlled foreign company has a business establishment and individuals working for it in at least one EEA state, and whether the amount specified in the application is a part of the controlled foreign company’s chargeable profits that represents net economic value created directly by the work of individuals working for the company in an EEA state where the company has a business establishment. So, the Commissioners of HMRC would expect to receive this information in all applications.

The legislation provides for a controlled foreign company to make a single application in relation to a particular accounting period, which can cover any/all EEA state(s) in which the controlled foreign company has a business establishment. (Though in the event that an application covers more than one EEA state, applicants may choose to organise their application into separate parts for each state).


Applicants should be prepared to provide a similar level of documentation to support their computation of the part of the controlled foreign company’s chargeable profits representing “net economic value” for the purposes of these rules. Only the information listed in INTM256090 need be provided at the time the application is made - further documentation will only be required if HMRC request it.

Corporation tax instalments

The Corporation Tax (Instalment Payments) Regulations 1998 require large companies to make instalment payments in relation to their tax liability, including any controlled foreign companies charge. Where a UK resident company intends, or has made, an application under ICTA88/S751A that the company expects to be granted, then the company can calculate its advance instalment payments on that basis. i.e. for this purpose the company can take account of any reduction in its controlled foreign companies charge that would result from their application being granted, unless and until its application has been refused.

Right of Appeal

If HMRC refuse to grant an application under ICTA88/S751A then the applicant will have a period of 30 days from the date the application is refused to give HMRC notice in writing, if the applicant wishes to appeal to the Special Commissioners (see ICTA88/S751B(5) to ICTA88/S751B (9)).


Applications will be considered on the basis that they are true and disclose all the relevant facts. In the event that a return (or amended return) is based on an application that was granted on an incorrect basis, then a discovery assessment may be made subsequently, as provided for by FA98/SCH18/PARA41 onwards.