INTM216030 - Controlled Foreign Companies: Reviews
Reports to CT & VAT, International CT
The Inspector should keep close links with CT & VAT,
International CT when dealing with Chapter IV. A formal report must
be made where:
Periods prior to self assessment
- the Inspector thinks a Board's direction is needed in order to
make a Chapter IV assessment
- the Board needs to use any of its other formal powers under
Chapter IV. An example might be to amend a notice of direction or
to use the power to get information
- the case is settled, and
- The tax is assessed, or
- there is a result in favour of the Revenue. A company might, for example, pay an acceptable dividend or wind up its company in the low tax territory,
- the Inspector has had to agree that there is no tax due but feels that Chapter IV ought to have applied.
For further information see INTM215000.
Periods of self assessment
- a) an apportionment falls to be made under ICTA/S747(4)
(interests held other than by virtue of ordinary shares alone) and
the Inspector is dissatisfied with the basis adopted by the
company.
- b) before a closure notice is issued, following enquiries, which concludes that the figure for controlled foreign companies tax should be amended. This report is to seek Board's sanction.
The Inspector should also feel free to ask for help from CT & VAT, International CT where there is doubt or difficulty. Help should be sought where
- there is doubt about the meaning of a Chapter IV rule
- someone objects to the application of Chapter IV on the grounds of policy
- someone argues that they satisfy the motive test in a case where Chapter IV should apply
- the Board's sanction is relevant
- an advance clearance is requested
In a few cases CT & VAT, International CT will look to see
if there is Chapter IV tax. They will keep Inspectors informed of
what is happening in these cases.
Where, under the clearance procedures, CT & VAT,
International CT has agreed or disagreed a particular treatment for
an overseas company, be it the motive test, exempt activities test,
etc. the Inspector will be notified. Clearances given will continue
for later accounting periods as long as the facts and legislation
do not change. If the information received from CT & VAT,
International CT contradicts an entry (or absence of entry) on a
return, then the Inspector may well wish to make enquiries. The
Inspector may later be barred under FA98/SCH18/PARA44 from making a
discovery assessment if enquiries are not made into a return at the
time.
For self assessment periods Inspectors can agree claims to
the motive test. (For earlier periods any such claim should
continue to be submitted to CT & VAT, International CT before
agreement is given). Where the Inspector has doubts as to whether
and how the test applies, he or she must seek advice from CT &
VAT, International CT so that consistency in the application of the
test is ensured.
