- Latest available (Revised)
- Original (As enacted)
Finance Act 1998, Paragraph 7 is up to date with all changes known to be in force on or before 17 August 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the legislation in the affected provisions. Use the ‘more’ link to open the changes and effects relevant to the provision you are viewing.
Whole provisions yet to be inserted into this Act (including any effects on those provisions):
7U.K.For section 752 of the Taxes Act 1988 (apportionment of chargeable profits and creditable tax) there shall be substituted—
(1)This section applies in any case where an apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company.
(2)Where—
(a)the persons who have relevant interests in the controlled foreign company at any time in the relevant accounting period have those interests by virtue only of directly or indirectly holding ordinary shares of the company,
(b)each of those persons satisfies the condition that he is either—
(i)resident in the United Kingdom throughout that accounting period, or
(ii)resident in the United Kingdom at no time in that accounting period, and
(c)no company which has an intermediate interest in the controlled foreign company at any time in the relevant accounting period has that interest otherwise than by virtue of directly or indirectly holding ordinary shares of the controlled foreign company,
subsection (3) below shall apply.
(3)Where this subsection applies, the apportionment of the controlled foreign company’s chargeable profits and creditable tax (if any) for the relevant accounting period shall be made among the persons who have relevant interests in the company at any time in that period in direct proportion to the percentage of the issued ordinary shares of the controlled foreign company which, in accordance with section 752B, each of those relevant interests represents.
(4)Where subsection (3) above does not apply, the apportionment of the controlled foreign company’s chargeable profits and creditable tax (if any) for the relevant accounting period shall be made on a just and reasonable basis among the persons who have relevant interests in the company at any time in that period.
(1)This section has effect for the purpose of determining for the purposes of this Chapter who has a relevant interest in a controlled foreign company at any time; and references in this Chapter to relevant interests shall be construed accordingly.
(2)A UK resident company which has a direct or indirect interest in a controlled foreign company has a relevant interest in the company by virtue of that interest unless subsection (3) below otherwise provides.
(3)A UK resident company which has an indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest if it has the interest by virtue of having a direct or indirect interest in another UK resident company.
(4)A related person who has a direct or indirect interest in a controlled foreign company has a relevant interest in the company by virtue of that interest unless subsection (5) or (6) below otherwise provides.
(5)A related person who has an indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest if he has the interest by virtue of having a direct or indirect interest in—
(a)a UK resident company; or
(b)another related person.
(6)A related person who has a direct or indirect interest in a controlled foreign company does not have a relevant interest in the company by virtue of that interest to the extent that a UK resident company—
(a)has the whole or any part of the same interest indirectly, by virtue of having a direct or indirect interest in the related person, and
(b)by virtue of that indirect interest in the controlled foreign company, has a relevant interest in the company by virtue of subsection (2) above.
(7)A person who—
(a)has a direct interest in a controlled foreign company, but
(b)does not by virtue of subsections (2) to (6) above have a relevant interest in the company by virtue of that interest,
has a relevant interest in the company by virtue of that interest unless subsection (8) below otherwise provides.
(8)A person does not by virtue of subsection (7) above have a relevant interest in a controlled foreign company by virtue of having a direct interest in the company to the extent that another person—
(a)has the whole or any part of the same interest indirectly, and
(b)by virtue of that indirect interest, has a relevant interest in the company by virtue of subsections (2) to (6) above.
(9)No person has a relevant interest in a controlled foreign company otherwise than as provided by subsections (2) to (8) above.
(10)In this section—
“related person” means a person who—
is not a UK resident company, but
is connected or associated with a UK resident company which has by virtue of subsection (2) above a relevant interest in the controlled foreign company in question;
“UK resident company” means a company resident in the United Kingdom.
(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—
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—
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.
(1)In this section “the relevant provisions” means sections 752 to 752B and this section.
(2)For the purposes of the relevant provisions—
(a)a person has a direct interest in a company if (and only if) he has an interest in the company otherwise than by virtue of having an interest in another company;
(b)a person has an indirect interest in a company if (and only if) he has an interest in the company by virtue of having an interest in another company;
(c)a person indirectly holds shares of a controlled foreign company if (and only if) he directly holds ordinary shares of a company which is share-linked to the controlled foreign company.
(3)For the purposes of the relevant provisions, a company is “share-linked" to a controlled foreign company if it has an interest in the controlled foreign company only by virtue of directly holding ordinary shares—
(a)of the controlled foreign company, or
(b)of the controlled foreign company or of one or more companies which are share-linked to the controlled foreign company by virtue of paragraph (a) above, or
(c)of the controlled foreign company or of one or more companies which are share-linked to the controlled foreign company by virtue of paragraph (a) or (b) above,
and so on.
(4)For the purposes of the relevant provisions, a company (“company A") has an intermediate interest in a controlled foreign company if (and only if)—
(a)it has a direct or indirect interest in the controlled foreign company; and
(b)one or more other persons have relevant interests in the controlled foreign company by virtue of having a direct or indirect interest in company A.
(5)Any interest or shares held by a nominee or bare trustee shall be treated for the purposes of the relevant provisions as held by the person or persons for whom the nominee or bare trustee holds the interest or shares.
(6)Where—
(a)an interest in a controlled foreign company is held in a fiduciary or representative capacity, and
(b)subsection (5) above does not apply, but
(c)there are one or more identifiable beneficiaries,
the interest shall be treated for the purposes of the relevant provisions as held by that beneficiary or, as the case may be, as apportioned on a just and reasonable basis among those beneficiaries.
(7)In the relevant provisions—
“bare trustee” means a person acting as trustee—
for a person absolutely entitled as against the trustee; or
for any person who would be so entitled but for being a minor or otherwise under a disability; or
for two or more persons who are or would, but for all or any of them being a minor or otherwise under a disability, be jointly so entitled;
“ordinary shares", in the case of any company, means shares of a single class, however described, which is the only class of shares issued by the company;
“the relevant accounting period” means the accounting period mentioned in section 752(1);
“share” includes a reference to a fraction of a share.”
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.
Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.
Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.
Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.
Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:
This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.
Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:
Click 'View More' or select 'More Resources' tab for additional information including: