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Introduction

The controlled foreign company (CFC) rules as outlined in this note apply to accounting periods beginning on or after 1 January 2013, the date upon which significant changes made by Finance Act 2012 became effective.

From this date, the CFC rules also apply to foreign branches in respect of which an exemption election has been made. See the Foreign ‘branch’ exemption ― overview guidance note for more details.

The rules are complex and this guidance note outlines the main provisions only. More detailed commentary can be found in Simon’s Taxes D4.401.

HMRC guidance on the CFC regime is available at INTM190000 onwards.

CFCs ― basic principles

A CFC is any company which is resident outside the UK, but ‘controlled’ by a UK resident person or persons. This can include companies and individuals. UK resident persons control a company if they have the power to secure that the affairs of the company are conducted in accordance with their wishes, or if they are entitled to more than 50% of the proceeds on a disposal or a winding