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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: How do you determine the profits of a Qualifying Loan Relationship: contents

If the CFC was a UK resident company, its credits and debits from all its non-trading loan relationships would be aggregated to form a total figure of a non-trading profit or a non-trading deficit. This is how the assumed total profits of the CFC are calculated for the purposes of TIOPA10/Part 9A/Chapter 5. However a CFC may have a number of non-trading loan relationships, and not all of these may be qualifying loan relationships (“QLRs” - INTM217000). So it is necessary to separate the non trading finance profits (“NTFPs” - INTM203000) of a CFC which are subject to a claim under Chapter 9 as they arise from QLRs from the rest of the assumed total profits of the CFC. This is provided by section 371IF which sets out the steps to be followed to calculate the profits of each QLR. These profits will either be exempted under the various parts of Chapter 9, or will pass through the CFC charge gateway at Chapter 5.