Old CFC rules

Old CFC rules

ARCHIVED: This Practice Note has been archived and is not maintained.

The CFC regime imposes a UK tax charge on the UK resident controllers in respect of the profits of certain controlled foreign companies (CFCs). The regime described here is the old CFC regime applying for accounting periods of CFCs starting before 1 January 2013. The regime was completely reformed with effect for accounting periods of CFCs starting on or after 1 January 2013, for which see: CFC rules—overview.

Definition of a CFC

A CFC is a company that is:

•
resident outside the UK
•
controlled by persons resident in the UK, and
•
subject to a lower level of taxation in the territory in which it is resident

See: Old CFC rules—definition of a CFC: residence and Old CFC rules—definition of a CFC: control.

Exceptions from the CFC rules

Even if a company is found to be a CFC, the CFC regime does not apply if the CFC:

•
is engaged in certain exempt activities
•
is a trading company with a limited UK connection
•
is

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