Join our mailing list

 

 


 



Join us on Twitter Lowtax Facebook page Join our discussion on LinkedIn Join us on Google+ Delicious Subscribe to the Tax-News RSS Feed
 
 

UK Fact-File Part 4:
Individual Business Tax-Efficient Structures

4.4 UK Controlled Foreign Corporation (CFC) Rules

Controlled Foreign Company rules

The UK has Controlled Foreign Company (CFC) rules to prevent multinationals from avoiding UK tax by diverting profits to tax havens and preferential regimes. A CFC is defined as an overseas company that is controlled by UK residents and which pays less than three quarters of the tax that it would have paid on its income had it been resident in the UK. Under recent changes to the legislation, a UK company may apply to HMRC to reduce the amount of chargeable profits of a CFC apportioned to a UK company. This means that profits of CFCs arising from genuine economic activity in other EU member states or states in the European Economic Area can be disregarded.

The legislation requires that there is a calculation of tax due along the lines of Corporation Tax and a self-assessment of tax due by all UK companies to which 25% or more of the profits have been apportioned.

Further changes in this contentious area are expected in the coming years, however, and a consultation paper has recently been issued.

Where Double Taxation Treaties exist between the UK and other countries, the terms of these treaties may still apply.


 

Introductory Guides

Brief, clearly written summaries with links to relevant sections of the Fact-File. The Fact-File itself is linked in full below.

 

Fact-File

Part 1: UK Business Formation for Individuals

  1. UK Individual Business Structures
  2. UK Individual Business Registration
  3. UK Individual Business Registration Cost
  4. UK Individual Business Licensing
  5. UK Foreigners in Business
  6. UK Business Organisations
  7. UK Business Accounting
  8. UK Family Business Ownership
  9. UK Venture Capital
  10. UK Individual Business Franchises

Part 2: UK Individual Business Domestic Taxation

  1. UK Individual Business Tax Residence Rules
  2. UK Permanent Establishment
  3. UK Individual Income Tax Rates and Bands
  4. UK Personal Allowances and Business Deductions
  5. UK Husband and Wife Partnerships
  6. UK Partnership Income Taxation
  7. UK Limited Companies Income Taxation
  8. UK Business Profit Retention
  9. UK Business Losses
  10. UK Value Added Tax (VAT)
  11. UK Individual Business Capital Gains Tax (CGT)
  12. UK Individual Business Other Taxes
  13. UK Individual Artists Royalties
  14. UK Individual Business Tax-Efficient Profit Distribution

Part 3: UK Individual Business International Taxation

  1. UK Individual Business International Tax Liability
  2. UK Individual Business Withholding Taxes
  3. UK Double Tax Treaties

Part 4: UK Individual Business Tax-Efficient Structures

  1. UK Individual Business Trusts and Foundations
  2. UK Individual Business for Non-Residents
  3. UK Individual Business use of Offshore
  4. UK Controlled Foreign Corporation (CFC) Rules
  5. UK Personal Estate and Inheritance Planning

Part 5: UK Small Business Incentive Programs

  1. UK Small Business Support Schemes
  2. UK Training Incentive Schemes
  3. UK R&D Tax Credits
  4. UK Individual Business Tax Holidays

Part 6: UK Individual Business Employment Issues

  1. UK Individual Business Employer Responsibilities
  2. UK Employment vs Self-Employment Tax Issues
  3. UK Apprenticeship and Work Experience Schemes
  4. UK Employee Dismissal Rules
  5. UK Business Owner Employment and Invoicing Rules

Part 7: UK Business Owner Welfare and Lifestyle

  1. UK Business Social Security
  2. UK Business Domestic Pensions
  3. UK Offshore and International Pensions
  4. UK Individual Business Healthcare
  5. UK Individual Business Banking Services
  6. UK Education
  7. UK Individual or Business Leaving UK
  8. UK Domestic Real Estate
  9. UK International Real Estate