188体育

The first stage in establishing whether there is a Chapter IV liability is to determine whether a controlled foreign company exists. ICTA88/S747(1) defines a controlled foreign company as a company which in an accounting period is:

• resident outside the United Kingdom, and
• controlled by persons resident in the United Kingdom, and
• subject to a lower level of taxation in its territory of residence.

There is no definition of 鈥榗ompany鈥� included in Chapter IV, so the meaning given by ITA07/S992 (1) applies, see INTM254360. The definition of an 鈥榓ccounting period鈥� is given at INTM254390. The terms 鈥榬esident鈥� and 鈥榯erritory of residence鈥� are dealt with at INTM254400. Until 21 March 2000, 鈥榗ontrol鈥� was determined broadly in accordance with ICTA88/S416. From that date, ICTA88/S755D provides a definition of 鈥榗ontrol鈥� specific to Chapter IV, more details of which are given in at INTM254370. If anyone has doubts about whether an overseas entity is a company they can ask CSTD Business, Assets & International Base Protection Policy Team for advice.

The test of whether a foreign company is subject to a 鈥榣ower level of taxation鈥� is explained at INTM254380. A comparison is made between the tax which the company has paid in its territory of residence and the Corporation Tax which it would have paid if it had been resident in the United Kingdom. If the former is less than three-quarters of the latter the company is subject to a lower level of taxation.