Section 64: Controlled foreign companies, Finance Act 2008

Chapter 4 of Part 17 of ICTA (controlled foreign companies) is amended as follows.

In section 747 (imputation of chargeable profits of controlled foreign companies)—

in subsection (6), before "and" at the end of paragraph (a) insert—aaany reference in this Chapter to its chargeable profits for an accounting period includes (subject to subsections (7) to (9)) income which accrues during that accounting period to the trustees of a settlement in relation to which the company is a settlor or a beneficiary;, and

after that subsection insert—7Where there is more than one settlor or beneficiary in relation to the settlement mentioned in subsection (6)(aa), the income is to be apportioned between the company and the other settlors or beneficiaries on a just and reasonable basis.8Where income within subsection (6)(aa) is included in the chargeable profits of a company, any dividend or other distribution received by the company which derives from that income is not included in the chargeable profits of the company to the extent that it is so derived.9Any income within subsection (6)(aa) which would (apart from this subsection)—is not to be included in the chargeable profits of the company which is a settlor.abe included in the chargeable profits of a company which is a beneficiary in relation to a settlement and apportioned under subsection (3), andbbe included in the chargeable profits of a company which is a settlor in relation to the settlement and apportioned under that subsection,

In section 755D (meaning of control)—

after subsection (1) insert—1AFor the purposes of this Chapter a person also controls a company if the person possesses, or is entitled to acquire, such rights as would—aif the whole of the income of the company were distributed, entitle the person to receive the greater part of the amount so distributed,bif the whole of the company's share capital were disposed of, entitle the person to receive the greater part of the proceeds of the disposal, orcin the event of the winding-up of the company or in any other circumstances, entitle the person to receive the greater part of the assets of the company which would then be available for distribution., and

in subsection (2), after "above" insert ." or satisfy subsection (1A) above "

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In paragraph 6 of Schedule 25 (definition of exempt activities), after sub-paragraph (5B) insert—

The amendments made by subsections (2) and (5) have effect in relation to income accruing on or after 12 March 2008.

The amendments made by subsection (3) have effect for determining whether, at any time on or after 12 March 2008, a company is controlled by persons resident in the United Kingdom for the purposes of Chapter 4 of Part 17 of ICTA.

The amendments made by subsection (4) have effect in relation to any dividend paid on or after 12 March 2008.

In relation to an accounting period of a company beginning before, and ending on or after, 12 March 2008 ("the straddling period"), the amendments made by this section have effect as if, for the purposes of Chapter 4 of Part 17 of ICTA, so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.

The company's chargeable profits for the straddling period, and its creditable tax (if any) for that period, are to be apportioned to the two separate accounting periods on a just and reasonable basis.

In this section "accounting period", "chargeable profits" and "creditable tax" have the same meaning as in Chapter 4 of Part 17 of ICTA.

Section 64: Controlled foreign companies

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