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HMRC internal manual

International Manual

HM Revenue & Customs
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Reliefs against Controlled Foreign Companies' tax: Relevant allowances

ICTA88/S754(5) and ICTA88/SCH26/PARA1(3)

A self assessment under Chapter IV is on an amount charged at the ‘appropriate rate’ (see INTM255860) on the chargeable profits apportioned to a United Kingdom company in respect of its interest in a controlled foreign company, less any creditable tax included in the apportionment. ICTA88/S754(5) makes it clear that no reliefs other than those provided in ICTA88/SCH26 are available to the UK company to set against the net Chapter IV charge.

The reliefs which qualify for set-off, subject to the conditions of ICTA88/SCH26, are described as ‘relevant allowances’. The relevant allowances are as follows:

  1. Losses to which CTA10/S37(3) (previously ICTA88/S393A(1)) applies.
  2. Charges on income to which CTA10/S189 (previously ICTA88/S338(1)) applies.
  3. Expenses of management to which CTA10/S68 (formerly ICTA88/SS75(1)) applies.
  4. Amounts available to the company by way of group relief.
  5. Any non-trading deficit on its loan relationships.