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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: How do you determine the profits of a Qualifying Loan Relationship: Qualifying Loan Relationship (QLR) Loss

If the calculation in TIOPA10/Part 9A/S371IF produces a qualifying loan relationship (“QLR” - INTM217000) “loss” (which could be the case if a CFC does not hedge FOREX risk and its QLRs give rise to a foreign exchange loss), the loss will be treated as a non-trading loan relationship debit or deficit and will be available for offset against profits of the CFC under the normal loss relief provisions in CTA09/Chapter 16. A loan relationship deficit from an earlier or later accounting period is brought into the calculation at step 5. A loan relationship deficit is only taken into account if it is a deficit for an accounting period of a company that is treated as a CFC by virtue of Part 9A.