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HMRC internal manual

International Manual

From
HM Revenue & Customs
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Controlled Foreign Companies carrying on general insurance business: Uncertainty as to lower level of taxation

SI1999/1408 Regulation 4

It is a consequence of using a funded basis of accounting that it may be unclear, when a United Kingdom company makes a return, whether an overseas company in which the UK company has an interest is subject to a lower level of taxation and is therefore a controlled foreign company (see INTM254380). The following provisions apply where a UK company with a returnable interest in an overseas company carrying on general insurance business and using an approved basis of fund accounting, is unable to establish at the date of delivery of the return whether the overseas company is subject to a lower level of taxation. First the United Kingdom company must consider whether the overseas company is likely to be subject to a lower level of taxation (and therefore a controlled foreign company). Where the UK company is

  1. of the opinion that the overseas company is likely to be subject to a lower level of taxation, then the return should be made on that basis, or
  2. of the opinion that the overseas company is unlikely to be subject to a lower level of taxation (and therefore not a controlled foreign company), then the return should be made on that basis.

If a UK company is genuinely uncertain whether (a) or (b) above should apply then it may wish to make the return on the basis of (a) above (see INTM256520).