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HMRC internal manual

International Manual

Controlled Foreign Companies: The CFC charge gateway chapter 9 - exemptions for profits from qualifying loan relationships: scope of the rules: order of the chapter 9 claim

TIOPA10/Part 9A/S371IA(5) provides that profits are exempted firstly by applying the qualifying resources (INTM218700) and 75% exemption rules (INTM218600) at sections 371IB and 371ID respectively and then by applying the matched interest rule (INTM219100) at section 371IE.

This particular order of claim is largely a by-product of the fact that the qualifying resources rule and the 75% exemption rule apply on a loan by loan basis and are therefore given priority to the matched interest rule which applies to all of the qualifying loan relationships (“QLRs” - INTM218100) of a CFC. However in practice if a group considers it would be eligible for full exemption under the matched interest rule in respect of all of its qualifying non-trading finance profits (“NTFPs - INTM203200), there will be no need to consider the qualifying resources rule or the 75% exemption rule and the Chapter 9 claim should stipulate that all NTFPs are exempt under section 371IE (matched interest rule).