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HMRC internal manual

International Manual

Controlled Foreign Companies: Introduction to the CFC Charge: Chargeable Profits of a CFC

A CFC’s chargeable profits for an accounting period are its assumed taxable total profits (as defined at Chapter 19 in INTM239000) for that period, to the extent that the CFC’s assumed total profits pass through the CFC charge gateway (see INTM194300) and have been relieved on a proportionate basis as provided for in step 2 of section 4(2) of Corporation Tax Act 2010.

The CFC’s chargeable profits for that period however are subject to any adjustment for settlement income that falls to be included in the CFC’s chargeable profits by virtue of TIOPA10/S371SB(4) and adjusted by TIOPA10/S371SB(7) and (8). The effect of these provisions is to include in chargeable profits, income accruing in a trust for which the CFC is a settlor or a beneficiary. Subsections (7) and (8) include measures to avoid taxing the same income twice i.e. on both the beneficiary and the settlor.