INTM215050 - Controlled Foreign Companies: before CTSA

Information powers: inspection of documents

ICTA88/S755 (3) to (7)

The Board may think that a company is a 'controlling company' of a 'foreign subsidiary'. If this is so, it can give written notice to the company. The notice can ask the company to let it see any relevant books, accounts or other documents or records. These may relate to the company itself or to any other company. This includes the 'foreign subsidiary' that it controls.

For example, if United Kingdom parent company A has a United Kingdom resident subsidiary B and a foreign subsidiary C, the Board can use ICTA88/S757 (3) to ask A to let it see the books and records of each of A, B and C.

The Act says that 'relevant' applies to

• the computation of any profits of the foreign subsidiary
• whether to give or amend a direction for the foreign subsidiary or any connected or associated company
• the amount of chargeable profits or creditable tax. This is for the foreign subsidiary or a connected or associated company.
• the tax that a United Kingdom resident company may have to pay under Chapter IV.

The last paragraph of INTM215040 says what a 'connected or associated company' is.

Sometimes it is possible for a company to avoid the need to let the Board see its books or records, etc. Under ICTA88/S755 (6) the company can ask the Board to direct that it need not comply with a notice under ICTA88/S755 (3). The Board can do this if it feels that the notice ought not to have effect. The Board may refuse to do this. If it does refuse, the company can appeal to the Special Commissioners. It must do so within thirty days after the refusal.

Note that the right to set aside a notice does not extend to ICTA88/S755 (1) (provision of particulars).

If a company contacts the Inspector about ICTA88/S755 (6) or (7) the Inspector should refer at once to CT & VAT, International CT.