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HMRC internal manual

International Manual

HM Revenue & Customs
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Controlled Foreign Companies: Assumed Taxable Total Profits, Assumed Total Profits and the Corporation Tax Assumptions: Elections Under Section 9A of CTA 2010

Elections under section 9A of CTA 2010

The assumption of UK residence brings a CFC within the foreign exchange gains and loss provisions of the Taxes Acts. The rules for computing profits or losses where the functional currency of a company is not in sterling can be found at CTA10/S6 to 17.

CTA10/S9A enables a UK resident investment company to make (or withdraw) a designated currency election provided that certain conditions are met. TIOPA10/S371SH(1) and (2) provide that a CFC may also make (or withdraw) such an election provided that a notice is given to an officer of HMRC within the allowed time limits and the conditions for making such a notice (or withdrawing such a notice) are met. The chargeable company or chargeable companies entitled to give a notice to an officer of HMRC for the accounting period in which the notice will be given or withdrawn are those holding the majority of chargeable profits that would be apportioned to chargeable companies if an apportionment fell to be made under step 3 of section 371BC(1) for that accounting period.

Modification of sections 6 and 7 of CTA 2010

TIOPA10/S371SI modifies CTA10/S6 and section 7 in order that the designated currency election can apply, for CFC purposes only, where the CFC does not prepare its accounts in accordance with generally accepted accounting practice.