Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
, see all updates

Controlled Foreign Companies: The CFC Charge Gateway Chapter 3 - Determining which (if any) of Chapters 4 to 8 apply: Does Chapter 5 apply?: Overview

TIOPA10/S371CB

If the CFC has non-trading finance profits that are not otherwise excluded by the detailed rules in Chapter 3 they fall to considered by Chapter 5 (see INTM203000).

Profits that are incidental to the exempt business activity of the CFC are excluded from Chapter 5 under Chapter 3 (see INTM197750). Chapter 3 also provides a 5% safe harbour and non-trading finance profits that fall within the safe harbour are excluded from Chapter 5 (See INTM197760). Profits that fall within Chapter 8 (the solo consolidation rule for banks see INTM213000) are similarly excluded from Chapter 5.

Additionally, a CFC that has non-trading finance profits derived from a “qualifying loan relationship” may claim that the profits arising should be dealt with under Chapter 9 (exemptions for profits from qualifying loan relationships - see INTM216000) instead of Chapter 5. Such a claim would apply to all of the CFC’s non-trading finance profits derived from qualifying loan relationships present during the accounting period excluding those that are not already taken out of the CFC regime because they are incidental to the exempt business activity of the CFC.