MTT10140 - Scope: Definitions: Protected cell companies and qualifying transformer vehicles
Source: gov.uk (2025-08-05)


A protected cell company (PCC) is a single entity, but is divided according to the terms of its constitution into a ‘core’ and a number of ‘cells’ (altogether, the ‘constituent parts’ of the PCC). Each cell is economically independent and bankruptcy-remote from the other cells.

Each cell has an independent investor base and business. The core conducts the administrative functions of the PCC and makes only a nominal profit.

By the nature of the business they are permitted to carry on, PCCs will not own subsidiaries.

A PCC may meet the definition of a ‘qualifying transformer vehicle’. Qualifying transformer vehicles are exempt from corporation tax.

A PCC, for MTT purposes, is one that is incorporated under Part 4 of the Risk Transformation Regulations 2017.

The treatment of a PCC is set out in section 233 of Finance (No.2) Act 2023.

See GIM8262 for general guidance on protected cell companies and qualifying transformer vehicles.

See MTT10150 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt10150) for guidance on umbrella funds other than protected cell companies.

Treatment under MTT

Each constituent part of a PCC is treated as an entity in its own right for MTT purposes. The PCC itself is not to be regarded as an entity.

Each constituent part will only be in scope of MTT if it is a member of a qualifying group (see MTT10110 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt10110)).

The constituent parts are not to be treated as members of the same group simply by reason of their legal status as part of the same PCC.

Consequently, a cell of a PCC may be a member of one qualifying group, while other cells are members of other groups (or not in scope at all). Two or more cells could be members of the same qualifying group if they share a common majority owner, though in practice this would beuncommon.

The accounts of a PCC are not to be regarded as consolidated financial statements for MTT purposes.

Treatment of foreign protected cell companies

The UK legislation specifies the treatment for a PCC incorporated under UK legislation.

For a PCC incorporated under an equivalent foreign law, HMRC would accept the same treatment. Where the PCC definition varies in the foreign law, HMRC may accept the same treatment depending on the exact nature of the arrangement.

Domestic Top-up Tax

For DTT purposes, a qualifying transformer vehicle is an excluded entity if it is not a member of a multinational group. This is set out in section 267 of F(No.2)A23.

For this purpose, an entity is a ‘qualifying transformer vehicle’ if it is:
- an entity defined as a qualifying transformer vehicle by the Risk Transformation (Tax) Regulations 2017 (S.I. 2017/1212), or
- an entity that is a part of a protected cell company, where the protected cell company is defined as a qualifying transformer vehicle by those regulations.
Note that, for both MTT and DTT purposes, each constituent part of a protected cell company is treated as a distinct entity.

Distribution received from protected cell company

Where a distribution is received from a PCC, the 10% test for excluded dividend status (see MTT21140 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21140)) should be applied by reference to the recipient group’s percentage ownership of the relevant cell issuing the distribution, rather than of the PCC as a whole.

Domestic Top-up Tax – dividend receivable from protected cell company by wholly domestic group or entity

A dividend or other distribution received or accrued by a wholly domestic group or entity from a protected cell company will be treated as an excluded dividend for DTT purposes.

See MTT21140 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21140) for guidance on excluded dividends.