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HMRC internal manual

International Manual

Controlled Foreign Companies: EEA states - deduction for net economic value against apportionment: Information to be included in applications under ICTA88/S751A

All the following information should be provided, in a level of detail appropriate to the nature and complexity of the activities / arrangements covered by the application.

  1. Name of controlled foreign company
  2. United Kingdom Company’s interest in the controlled foreign company’s share and loan capital (by virtue of ICTA88/S749B)
  3. Tax district and reference number of United Kingdom interest holders where known
  4. Territory of residence of the controlled foreign company and details of branches including those in the United Kingdom.
  5. Place, and for new companies, date of incorporation of the controlled foreign company
  6. Confirmation that no other exemption is available to the controlled foreign company under the legislation at ICTA88/S748.
  7. The other EEA state(s) where the controlled foreign company has a business establishment and individuals working for the controlled foreign company in the state(s).
  8. A copy of the most recent accounts of the controlled foreign company (or where these have not yet been drawn up, management accounts or financial projections)
  9. Actual or expected equity at the beginning and end of the controlled foreign company’s accounting period
  10. Details of all investments held by the controlled foreign company and actual or projected income from these during the accounting period for which the application is made
  11. Details of all direct or indirect transactions between the United Kingdom and the controlled foreign company. This will include interest on loans (direct or indirect), royalties, payments for services, purchase or sale of goods etc.
  12. Full details (including address) of the controlled foreign company’s business establishment(s), the number of hours, days etc. occupied on the company’s business, the size of premises, whether premises are shared, in particular with group affiliates, the amount of rent paid by the controlled foreign company etc.
  13. Full details of staff working for the controlled foreign company in business establishment(s) in EEA states, including details of duties, experience, position of authority and salary.
  14. Details of any outsourced business activity.
  15. Full details of the business activity undertaken by the controlled foreign company. Where there is more than one business activity, details of where each activity is carried out and which individuals in each territory as detailed above at 13 are involved in carrying out each business activity.
  16. Details of sources of funding for the controlled foreign company’s activities, in particular sources of equity and intra-group borrowing.
  17. A computation of the controlled foreign company’s chargeable profits and creditable tax for the relevant accounting period.
  18. The computation of how the specified amount was arrived at and the reasons why it is considered that this amount is a part of the controlled foreign company’s chargeable profits that represents the net economic value created directly by the work of individuals working for the company in another EEA state where the company has a business establishment. Include details of the work directly carried out by individuals and how the net economic value to relevant interest holders or other members of the group was arrived at.
  19. Provide a computation of the amount by which the creditable tax of the controlled foreign company for the relevant accounting period should be reduced and an explanation of why you consider this to be the correct amount on a just and reasonable basis.

Applications, or potential applications under these rules, should be sent to:

HM Revenue & Customs
Business, Assets & International
Base Protection Policy Team
10 South Colonnade
Canary Wharf
London NE98 1ZZ

For Attn: Michael Paterson, Team Leader

Telephone 03000 541706

Note: In considering applications HMRC may request further information and documentation in relation to the application, though it is thought that the above information should be sufficient in most cases.