PART XVII TAX AVOIDANCE

C1C2C3CHAPTER IV CONTROLLED FOREIGN COMPANIES

Annotations:
Modifications etc. (not altering text)
C1

Pt. XVII Ch. IV (ss. 747-756) modified (27.7.1993) by 1993 c. 34, s. 119(3)

F1752B Section 752(3): the percentage of shares which a relevant interest represents.

1

For the purposes of section 752(3) above, where a person has a relevant interest in a controlled foreign company by virtue of indirectly holding issued ordinary shares of the company, the percentage of the issued ordinary shares of the company which the relevant interest represents is equal to—

P×Smath

where—

  • P is the product of the appropriate fractions of that person and each of the share-linked companies through which he indirectly holds the shares in question, other than the lowest share-linked company; and

  • S is the percentage of issued ordinary shares of the controlled foreign company which is held directly by the lowest share-linked company.

2

In subsection (1) above and this subsection—

  • “the appropriate fraction", in the case of a person who directly holds ordinary shares of a share-linked company, means that fraction of the issued ordinary shares of that company which his holding represents;

  • “the lowest share-linked company”, in relation to a person who indirectly holds ordinary shares of a controlled foreign company, means the share-linked company which directly holds the shares in question;

  • “share-linked company” means a company which is share-linked to the controlled foreign company in question.

3

Where a person has different indirect holdings of shares of the controlled foreign company (as in a case where different shares are held through different companies which are share-linked to the controlled foreign company)—

a

subsection (1) above shall apply separately in relation to the different holdings with any necessary modifications; and

b

for the purposes of section 752(3) above the percentage of the issued ordinary shares of the company which the relevant interest represents is the aggregate of the percentages resulting from those separate applications.

4

Where, for the purposes of subsection (3) of section 752, the percentage of the issued ordinary shares of the controlled foreign company which a person directly or indirectly holds varies during the relevant accounting period, he shall be treated for the purposes of that subsection as holding throughout that period that percentage of the issued ordinary shares of the company which is equal to the sum of the relevant percentages for each holding period in the relevant accounting period.

5

For the purposes of subsection (4) above—

  • “holding period", in the case of any person, means a part of the relevant accounting period during which the percentage of the issued ordinary shares of the controlled foreign company which the person holds (whether directly or indirectly) remains the same;

  • “the relevant percentage", in the case of a holding period, means the percentage equal to—

    P×HAmath

    where—

    • P is the percentage of the issued ordinary shares of the controlled foreign company which the person in question directly or indirectly holds in the holding period, as calculated in accordance with subsections (1) to (3) above so far as applicable;

    • H is the number of days in the holding period; and

    • A is the number of days in the relevant accounting period.