Controlled Foreign Companies (CFCs)

Finance Bill 2012

The Finance Bill and Explanatory Notes were published on 29 March 2012. To assist interested parties a non-exhaustive list of the changes made since the update in February was also published.

Documents relating to the working groups and policy making process are published on the working groups and committees page working groups and committees page. This will be updated with further documentation before Public Bill Committee.

Update on CFC reform

On 29 February 2012 the Government published an update on CFC reform as well as updated draft legislation. This includes an updated Gateway.

On 31 January 2012 the Government published an update on CFC reform as well as updated draft legislation for consultation, changes in the document are underlined to allow them to be easily identified.

Open Event

Thanks to all those who attended the open event on 11 January 2012. The presentation given at the event is available to download:

Presentation slides for CFC Reform open event (PPT 494KB)

Consultations

Further technical consultation

The consultation on the detailed proposals for the new CFC regime closed on 22 September. The Government would like to thank those who have provided responses to that consultation and encourage interested parties to continue engaging with the ongoing consultation process.

The Government welcomes the written responses to the consultation and the productive dialogue that has taken place between officials and businesses, advisers and industry bodies over the summer.

The Government has published its response to the June 2011 consultation which closed on 22 September 2011. Further details can be found below.

Controlled Foreign Companies (CFC) reform: response to consultation (PDF 360KB)

The Government has also published draft legislation for consultation, together with Explanatory Notes. The consultation on draft legislation is now open and will close on 10 February 2012.

Finance Bill 2012 - draft clauses and Explanatory Notes (HMRC website, opens in a new window)

Full details on how to contribute to the consultation, the draft legislaion and the Explanatory Notes can be found in our consultation area.

Controlled Foreign Companies (CFC) reform: detailed proposals (further technical consultation)

Closed consultations

Controlled Foreign Companies (CFC) reform; (closed)
Controlled Foreign Companies (CFC) interim improvements (closed)

You will also find further information relating to work on CFC reform on this page. If you would like to be kept informed of further updates on CFC reform, please corporatetaxreform@hmtreasury.gsi.gov.uk

Budget 2010 announcements

The Government announced the following:

Consultation will take place over the summer on interim improvements to the current CFC rules to be introduced in spring 2011. This demonstrates the Government's commitment to CFC reform and these rules will deliver some changes in advance of full reform to make the rules easier to operate and, where possible, enhance UK competitiveness.

Full reform of CFC rules will be completed by spring 2012. This allows the Government time to consider carefully how to make the current rules more competitive, to enhance long term stability and provide adequate protection of the UK tax base.

Key documents

Aim and scope of the CFC interim improvements

In July 2010, the Government published a note outlining the aim and scope of the CFC interim improvements that sets the framework for consultation.

Discussion document

In January 2010, HMT and HMRC released a discussion document on proposals for reforming the UK tax treatment of controlled foreign companies. The document can be accessed below. The Government would like to hear the views of business, as well as those of representative bodies and tax advisers, on the policy proposals outlined in this discussion document, in order to develop more detailed provisions.

Proposals for controlled foreign companies (CFC) reform: discussion document (PDF 344KB)

Policy principles

In July 2009, HM Treasury published a policy principles document to outline the current thinking on policy drivers, objectives and principles to support the reform of the CFC rules. This document provided parameters to facilitate discussions on the scope and mechanics of a new regime.

Reform of Controlled Foreign Companies (CFC): Policy principles document (112KB)

Stakeholder Engagement Strategy

The Government is committed to facilitating an open and transparent approach to the reform of the CFC rules. A brief update on the review to date and a plan for stakeholder engagement for the period to the end of 2009 can be accessed below.

Reform of Controlled Foreign Companies: Stakeholder engagement strategy (PDF 136KB)

Working groups and stakeholder events

Open letter (PBR 2008)

The Pre-Budget Report 2008 announced that the Government will continue to examine options to reform the UK’s Controlled Foreign Companies (CFC) rules. An accompanying open letter from the Financial Secretary was published ('Open letter on future direction of travel for taxing foreign subsidiaries') providing more context around this announcement.