SCHEDULES
SCHEDULE 42Controlled foreign companies: exempt activities
Companies engaged in wholesale, distributive, financial or service business
2
1
Paragraph 6 (meaning of “engaged in exempt activities”) is amended as follows.
2
In sub-paragraph (1)(c)
(requirement that any of sub-paragraphs (2) to (4A) applies to the company) for “(2) to (4A)” substitute “
(2), (3), (4) or (4A)
”
.
3
In sub-paragraph (2A) (persons from whom less than 50% of the gross trading receipts of a wholesale etc business of the controlled foreign company must be derived) omit the word “and” immediately preceding paragraph (c) and at the end of that paragraph add
;
d
persons not falling within paragraphs (a) to (c) above which are companies resident in the United Kingdom;
e
persons not falling within paragraphs (a) to (c) above which are companies not resident in the United Kingdom which carry on business through a branch or agency in the United Kingdom;
f
persons not falling within paragraphs (a) to (c) above who are individuals habitually resident in the United Kingdom;
but where the company is a controlled foreign company falling within sub-paragraph (2B) below, paragraphs (d) to (f) above shall be disregarded.
4
After sub-paragraph (2A) insert—
2B
A controlled foreign company falls within this sub-paragraph if either—
a
its main business is the effecting or carrying out of contracts of long-term insurance, other than protection business; or
b
it is a member of an insurance group and its main business is insuring or reinsuring large risks.
Paragraph 11A below has effect for the interpretation of this sub-paragraph.
2C
For the purposes of sub-paragraph (2)(b) above, a company’s gross trading receipts from a business shall be regarded as directly or indirectly derived from a person falling within sub-paragraph (2A)(e) above only to the extent that they are derived directly or indirectly from contracts or other arrangements relating to that person’s branch or agency in the United Kingdom.
5
In sub-paragraph (4C)
(which defines for the purposes of sub-paragraph (2)(b) a “25 per cent assessable interest”, an expression not used in sub-paragraph (2)(b) but used in sub-paragraph (2A)(b)) for “(2)(b)” substitute “
(2A)(b)
”
.