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HMRC internal manual

International Manual

HM Revenue & Customs
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Controlled Foreign Companies: The CFC Charge Gateway Chapter 9 - Exemptions for profits from Qualifying Loan Relationships: What is Excluded from the definition of a Qualifying Loan Relationship: Section 371IH(9A) to (9E): contents

TIOPA10/Part 9A/S371IH(9A) to (9E) applies to relevant arrangements made on or after 5 December 2013. The section switches off the full or partial exemption rules for loan relationship credits of a CFC that arise from an arrangement with a main purpose of transferring profits from existing intra-group lending out of the UK. If those credits fall within Chapter 5, they would therefore be included in full within the CFC’s chargeable profits.

The rule applies if a CFC’s creditor relationship is connected with an arrangement that has a main purpose of diverting into a CFC non-trading finance profit streams that were previously received by a UK resident company. Where achieving this diversion is not a main purpose of the arrangement, the rule will not apply.