INTM255470 - Controlled Foreign Companies: exemptions - the motive test: Application of motive test: examples - controlled foreign company바카라 사이트™s profits effectively subject to tax in the United Kingdom

Example 9

An offshore open-ended investment company is controlled by a United Kingdom resident company. The facts show that:

  • the main reason for the existence of the offshore company is to invest in cash and bonds; and
  • the company fails the non-qualifying investment test in FA96/SCH10/PARA8 such that the UK parent바카라 사이트™s holding in it is treated under FA96/SCH10/PARA4 as if it were a creditor relationship of the UK resident company and the sum each year chargeable under CTA09/S295 on the UK parent fully reflects the increase in the chargeable profits;

Whilst the existence of the company achieves a reduction in tax by a diversion of profits from the UK, the UK tax charge on the parent demonstrates that the achievement is not one of the main reasons for the company바카라 사이트™s existence. The diversion of profits leg of the motive test is consequently passed.