On 26 January 2010, the Government published a discussion document outlining proposals for reforming the UK's controlled foreign company (CFC) regime. The CFC regime applies broadly where profits have been artificially diverted from the UK into UK-controlled subsidiaries that are resident in a low tax jurisdiction. To the extent the rules are applicable, UK controlled groups may be subject to tax on profits arising from IP held outside the UK, even if such profits are not distributed to the UK. The proposed reform therefore raises important issues in relation to the taxation of IP that will be discussed in a separate client briefing.