CTM81110 - Groups & consortia: groups - entitlement to profits or assets available for distribution: option, limited & varying rights: referable to UK trade of non-resident company
CTA10/S179 and S180
FA00 introduced additional rules in CTA10/S179 and S180. They apply from 1 April 2000 for the purposes of:
- determining 75% and 90% subsidiary relationships where a company either surrendering or claiming group relief (CTM80100 onwards) or consortium relief (CTM80500 onwards) is not resident in the UK, and
-
working out a consortium member’s share in a consortium (CTM80540 and CTM80545), where a company owned by the consortium (CTM80530) is not resident in the UK and either claims or surrenders consortium relief.The rules apply in cases where:
- any equity holder holds shares or securities with rights (to dividends, interest or assets on a winding up) which depend in any way on to the extent to which profits or assets distributed are referable to the trade of the UK permanent establishment of the non-resident company, or
-
CTA10/S173 option arrangements (CTM81090) exist and either or both of the percentages described in CTM81095, being:
- a percentage of the profits of the non-resident company to which the equity holders would be entitled, or
-
a percentage of the assets of the non-resident company to which the equity holders would be entitled on a notional winding up,would differ at any time according to the extent to which profits or assets distributed are referable to the trade of the UK permanent establishment of the non-resident company.
Profits or assets are referable to the trade of a UK permanent establishment only to the extent that:
- they are used for or attributable to activities any profits from which are or would be within the charge to CT, and
- are not used or attributable to activities any profits from which are or would be exempted from CT by a bilateral double tax agreement.
- the percentage entitlement of an equity holder to profits or assets if these were distributed by reference to the non-resident company as an entity, and
-
the percentage entitlement of an equity holder to profits or assets if these were distributed by reference only to the UK permanent establishment of the non-resident company,as part of the various Part 5 Chapter 6 tests.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)