INTM212060 - Controlled Foreign Companies: United Kingdom companies carrying on life assurance business

Set-off of reliefs under ICTA88/SCH26/PARA1 and unrelieved surplus ACT under Regulations

Reliefs available under ICTA88/SCH26/PARA1 against the United Kingdom company’s liability to CFC tax must be made only against so much of that liability as is attributable to the eligible part of the apportioned profit.

Likewise unrelieved surplus advance corporation tax available for set-off under the Corporation Tax (Treatment of Surplus Advance Corporation Tax) Regulations 1999 can only be made against the liability that is attributable to the ‘eligible part’ of the apportioned profit and the reference to ‘liability to tax’ in regulation 20(1) and (2) should be taken as a reference to only so much of that liability as is attributable to the eligible part of the apportioned profit. In regulation 20(5) the amount of the Chapter IV profits on which the company is chargeable to corporation tax for the accounting period will be the eligible part of those profits only. The ‘eligible part’ of the apportioned profit is any ‘BLAGAB apportioned profit’ other than the policy holders’ part. The policy holders’ part is:

• in a case where FA89/S88A(4) applies, the whole part, and
• in any other case, the fraction described in FA89/88A(5)(b).

‘BLAGAB’ apportioned profit means the part of the apportioned profit which is referable to basic life assurance and general annuity business carried on by the United Kingdom company.