Taxation (International and Other Provisions) Act 2010 section 371QC

The basic rules

Section 371QC sets out the two basic rules for how a controlled foreign company's chargeable profits and creditable tax should be apportioned among the relevant persons.

• Where three conditions (X, Y and Z) are all met, chargeable profits and creditable tax are apportioned among relevant persons in proportion to their shareholdings under section 371QD.
• If any of the three conditions is not met, the apportionment must instead be made on a just and reasonable basis.
• The conditions require that all relevant interests and intermediate interests arise solely from direct or indirect holdings of ordinary shares in the CFC, and that each relevant person is either UK resident or non-UK resident throughout the entire accounting period.
• A company has an intermediate interest in the CFC if it holds an interest in the CFC and one or more relevant persons derive their relevant interests through that company.