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

Close company

Section 371SE provides a simple assumption that applies when determining the chargeable profits of a controlled foreign company (CFC): the CFC is to be treated as if it is not a close company.

• When calculating a CFC's chargeable profits, the CFC must be assumed not to be a close company
• A close company is broadly one controlled by five or fewer participators or by participators who are directors
• This assumption prevents the close company rules from distorting the calculation of a CFC's profits for UK tax purposes
• The assumption applies regardless of whether, in practice, the CFC would meet the definition of a close company under UK domestic law