Part 3Income tax, corporation tax and capital gains tax
Chapter 2Other provisions
International matters
90 Controlled foreign companies and treaty non-resident companies
1
In section 747 of the Taxes Act 1988 (imputation of chargeable profits and creditable tax of controlled foreign companies), after subsection (1A) insert—
1B
In determining, for the purposes of any provision of this Chapter except subsection (1)(a) above, whether a company is a person resident in the United Kingdom, section 249 of the Finance Act 1994 (under which a company is treated as non-resident if it is so treated for double taxation relief purposes) shall be disregarded.
2
Subsection (1)—
a
shall be deemed to have come into force on 1st April 2002, and
F2b
does not apply to a company (“the non-resident company”) that—
i
by virtue of section 249 of the Finance Act 1994 was treated as resident outside the United Kingdom, and not resident in the United Kingdom, immediately before that date, and
ii
has not subsequently ceased to be so treated,
unless condition A or B is met in relation to the non-resident company at any time on or after 22nd March 2006.
F13
Condition A is met in relation to the non-resident company at any time on or after 22nd March 2006 if—
a
immediately before 22nd March 2006 the non-resident company does not own directly or indirectly any company as a subsidiary company, and
b
at any time on or after that date the non-resident company becomes the direct or indirect owner of a UK resident company as a subsidiary company.
4
Condition B is met in relation to the non-resident company at any time on or after 22nd March 2006 if—
a
immediately before 22nd March 2006 the non-resident company owns directly or indirectly any company as a subsidiary company (which may be a UK resident company),
b
at any time (“the relevant time”) on or after that date the non-resident company becomes the direct or indirect owner of any UK resident company as a subsidiary company (or, as the case may be, another UK resident company), and
c
directly or indirectly in consequence of, or otherwise in connection with, the ownership mentioned in paragraph (b) there is a qualifying change in activities.
5
There is a qualifying change in activities if, at the relevant time or any subsequent time,—
a
there is a major change in the nature, conduct or scale of the non-resident company’s activities, or
b
there is a major change in the nature, conduct or scale of the activities of the group of companies of which the non-resident company is a member.
6
In this section references to directly or indirectly owning a company are references to owning it—
a
directly or through another company or companies, or
b
partly directly and partly through another company or companies.
7
In this section references to ownership are to be read as references to beneficial ownership.
8
In this section “UK resident company”, in relation to any time, means any company which is resident in the United Kingdom at that time.