»Ê¹ÚÌåÓýapp

This chapter contains the rules for apportioning a CFC’s chargeable profits and credible tax, for an accounting period, among the relevant persons for the purposes of step 3 in TIOPA10/S371BC(1) (see INTM194400) which is the section that sets out the steps for determining the CFC charge on potentially chargeable companies. »Ê¹ÚÌåÓýapp CFC charge only applies to a CFC in an accounting period if the CFC has chargeable profits that have passed through the CFC charge gateway (see Chapters 3 to 8) and none of the exemptions set out in Chapters 10 to 14 apply. Step 3 requires the chargeable profits and the creditable tax to be apportioned amongst the “relevant personsâ€�. »Ê¹ÚÌåÓýapp relevant persons are those who have a “relevant interest in the CFC at any time during the accounting period. »Ê¹ÚÌåÓýapp residence of the “relevant personsâ€� is not restricted to the UK (see INTM227000 to show how Chapter 15 defines relevant interests and relevant persons.)

»Ê¹ÚÌåÓýapp apportionment of chargeable profits and creditable tax may result in amounts being apportioned to both individuals and companies and to non-UK residents as well as UK residents. However, the CFC charge is imposed only on companies that are resident in the UK. Unless an exclusion applies, such a company will be subject to a CFC charge where its relevant interest together with the relevant interests of persons connected or associated with it represents at least 25% of the CFC’s chargeable profits (See INTM194500.)

»Ê¹ÚÌåÓýapp CFC charge under Part 9A of TIOPA2010 is to a sum equal to corporation tax at the appropriate rate (see below) on the chargeable profits apportioned to the chargeable company less any creditable tax included in the apportionment (see step 5 in INTM194400. )

Detailed rules - Interpretation

TIOPA10/S371QB contains provisions about the interpretation of the rules for the purposes of Chapter 17. TIOPA10/S371QB(2) applies the interpretation provisions contained in section TIOPA10/S371OB in Chapter 15 to Chapter 17 in the same way, which defines what is meant by a relevant interest in a CFC. TIOPA10/371OB also deals with direct and indirect interests and interests held in a CFC via an open-ended investment company or a trust or otherwise held in a fiduciary or representative capacity (see INTM227000.)

TIOPA10/S371QB(3) and (4) define “ordinary sharesâ€� for the purpose of applying the basic apportionment rule set out in TIOPA10/371QC and TIOPA10/371QD. “Ordinary sharesâ€� means shares of a single class (however they are described) which is the only class of “shareâ€� issued by that CFC. »Ê¹ÚÌåÓýapp term “shareâ€� includes a fraction of a share. Shares issued by a CFC are not to be taken to be of a single class if they are paid up to different amounts.

TIOPA10/S371QB(5) defines when a person ‘indirectlyâ€� holds ordinary shares in a CFC. This occurs when the person directly holds shares in a company “share-linkedâ€� to the CFC. »Ê¹ÚÌåÓýapp expression “share-linkedâ€� essentially means the holding of ordinary shares in the CFC via a chain of companies. »Ê¹ÚÌåÓýapp companies in the chain between the relevant persons and the CFC are the “intermediate interestâ€� holders, defined in TIOPA10/S371QC(6).