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

What are "the corporation tax assumptions"?

Section 371SC introduces the concept of "the corporation tax assumptions" and explains the three key calculations to which those assumptions must be applied when determining a controlled foreign company's UK tax position for an accounting period.

• The corporation tax assumptions are a defined set of assumptions set out in sections 371SD to 371SR of the Act, used to calculate a CFC's hypothetical UK tax liability.
• The assumptions must be applied when working out a CFC's assumed taxable total profits for a given accounting period (referred to as "the relevant accounting period").
• The assumptions must also be applied when calculating the corresponding UK tax — that is, the amount of UK corporation tax that would be due on the CFC's chargeable profits if it were a UK-resident company.
• Finally, the assumptions apply when determining the CFC's creditable tax — the amount of foreign tax paid by the CFC that can be credited against any UK tax charge arising under the CFC rules.