Finance (No. 2) Bill - continued        House of Commons
SCHEDULE 17, CONTROLLED FOREIGN COMPANIES - continued

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Section 750
      5. - (1) Section 750 of the Taxes Act 1988 (territories with a lower level of taxation) shall be amended as follows.
 
      (2) In subsection (1) (which refers to certain provisions of section 749)-
 
 
    (a) for "subsection (3)" there shall be substituted "subsection (5)"; and
 
    (b) for "subsection (1) or subsection (2)" there shall be substituted "any of subsections (1) to (4)".
      (3) In subsection (3), for paragraph (a) (which refers to a direction under section 747(1) and a declaration under paragraph 11(3) of Schedule 24) there shall be substituted-
 
 
    "(a) it shall be assumed for the purposes of Schedule 24 that an apportionment under section 747(3) falls to be made as regards that period; and".
 
Section 751
      6. - (1) Section 751 of the Taxes Act 1988 (accounting periods and creditable tax) shall be amended as follows.
 
      (2) In subsection (1) (occasions on which an accounting period begins) in paragraph (b) (company commencing to carry on business)-
 
 
    (a) the words "not being the subject of an earlier direction under section 747(1)" shall cease to have effect; and
 
    (b) after "commences to carry on business" there shall be inserted "unless an accounting period of the company has previously begun as respects which an apportionment under section 747(3) falls or has fallen to be made".
      (3) In subsection (4) (direction may specify accounting period where beginning or end appears uncertain)-
 
 
    (a) for "a direction under section 747(1) may" there shall be substituted "the Board may by notice"; and
 
    (b) for "the direction" there shall be substituted "the notice".
      (4) In subsection (5) (power to amend so as to specify true accounting period where further facts come to the knowledge of the Board after making a direction)-
 
 
    (a) for "making of a direction (including facts emerging on an appeal against notice of the making of the direction)" there shall be substituted "giving of a notice under subsection (4) above"; and
 
    (b) for "direction", in the third and fourth places where it occurs, there shall be substituted "notice".
      (5) After subsection (5) there shall be inserted-
 
 
    "(5A) Any notice under subsection (4) above, and notice of any amendment of such a notice under subsection (5) above, shall be given to every person who has an assessable interest, (as defined in section 749(9)) in the company in the accounting period in question."
 
      (6) In subsection (6) (meaning of "creditable tax") for "in respect of which a direction is given under section 747(1)" there shall be substituted "as regards which an apportionment under section 747(3) falls to be made".
 
 
Section 752
      7. For section 752 of the Taxes Act 1988 (apportionment of chargeable profits and creditable tax) there shall be substituted-
 
"Apportionment of chargeable profits and creditable tax.     752. - (1) This section applies in any case where an apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company.
 
      (2) Where-
 
 
    (a) the persons who have relevant interests in the controlled foreign company at any time in the relevant accounting period have those interests by virtue only of directly or indirectly holding ordinary shares of the company,
 
    (b) each of those persons satisfies the condition that he is either-
 
      (i) resident in the United Kingdom throughout that accounting period, or
 
      (ii) resident in the United Kingdom at no time in that accounting period, and
 
    (c) no company which has an intermediate interest in the controlled foreign company at any time in the relevant accounting period has that interest otherwise than by virtue of directly or indirectly holding ordinary shares of the controlled foreign company,

subsection (3) below shall apply.
      (3) Where this subsection applies, the apportionment of the controlled foreign company's chargeable profits and creditable tax (if any) for the relevant accounting period shall be made among the persons who have relevant interests in the company at any time in that period in direct proportion to the percentage of the issued ordinary shares of the controlled foreign company which, in accordance with section 752B, each of those relevant interests represents.
 
      (4) Where subsection (3) above does not apply, the apportionment of the controlled foreign company's chargeable profits and creditable tax (if any) for the relevant accounting period shall be made on a just and reasonable basis among the persons who have relevant interests in the company at any time in that period.
 
 
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