Global

Details

  • Service: Tax, Global Indirect Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 4/25/2014

United Kingdom - Draft CFC guidance, thin capitalisation update 

April 25: HM Revenue & Customs (HMRC) published draft guidance concerning one of the amendments to the controlled foreign company (CFC) exemption rules contained in the 2014 Finance Bill?i.e., the amendment that prevents the exemption applying to a loan if it is connected with an arrangement that has a main purpose of artificially diverting, into a CFC, profits that are currently received by a UK group company.

The draft HMRC guidance [PDF 77 KB] provides an overview of the draft legislation and then sets out HMRC’s view on its application in 11 different scenario or fact patterns, including:


  • Different outcomes in situations involving replacing one common structure (a tower structure) with another (an Irish/UK conduit structure)
  • The operation of the draft legislation when one group purchases another using temporary funding from the UK
  • The position when a group funds its overseas entities using revolving intra-group facilities, such as overdrafts
  • The operation of the draft legislation for a loss-making group

Guidance on thin capitalisation

The thin capitalisation guidance in the HMRC International Manual has been updated.


Some of the main changes to the content are as follows:


  • The inclusion of an option to extend an advance thin capitalisation agreement (ATCA) if the funding in question is likely to be refinanced within 18 months of expiry of the ATCA
  • A recommendation to hold initial meetings with taxpayers rather than enter into detailed correspondence
  • Confirmation that Transfer Pricing Panel approval is not always required for an ATCA in smaller cases
  • New guidance on netting debt

Read an April 2014 report [PDF 900 KB] prepared by the KPMG member firm in the United Kingdom: Weekly Tax Matters (25 April 2014)


Also included in the KPMG report are discussions of the following topics:


  • BEPS update
  • Central registry of UK company beneficial ownership information
  • UK treaty priorities announced
  • Country-by-country reporting – EU Accounting Directive
  • Release of additional HMRC Guidance on the payment of trail commission
  • British Telecommunications Plc - Court of Appeal - Judgment
  • Round up of recently released VAT Briefs
  • France – Temporary tax on high remuneration compliance developments
  • Real Time Information round up
  • New HMRC powers to tackle offshore tax evasion
  • Government opposing EU trust registry plan



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