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

Just and reasonable apportionments

Section 371UC deals with HMRC's power to override the basis a company has used to apportion a controlled foreign company's chargeable profits and creditable tax, and the limited grounds on which that decision can be challenged.

• When a CFC's chargeable profits and creditable tax must be apportioned on a just and reasonable basis, and a company files or amends its tax return using a particular method of apportionment, HMRC may intervene.
• An HMRC officer can determine that a different basis of apportionment should be used instead of the one the company adopted, and the tax position then proceeds as though the officer's basis were the only permissible one.
• The company can challenge the officer's determination, but only through an appeal against an amendment to its company tax return made by HMRC during an enquiry or discovery process.
• The sole ground on which the officer's determination can be challenged is that the basis of apportionment chosen by the officer is not just and reasonable.