Question 4

Master Inc is a company registered and incorporated in the Republic of Korea. Its shares are held as follows:

$000

Blue Ltd UK resident 4,000

Reds Ltd UK resident 1,000

Darren Watkins (a private individual) UK resident 2,000

Orange SA (a French company) resident in France 3,000

10,000

All directors of Master Inc are resident in Korea and all strategic decisions of the company are taken there. The company will be considered tax resident in Korea.

( i) Is Master Inc controlled by UK tax residents? If yes, who would be liable to a CFC charge under UK legislation?

(ii) Compute the UK chargeable profits. The UK does not apply CFC charge to capital gains of the overseas company.

(iii) Assuming that the UK tax rate is 28% and none of the exemption tests is satisfied, calculate the charge to tax on Blue Ltd.