Controlled Foreign Companies: How the corporate tax regime works for CFCs: Clearances: Further information necessary for specific Chapters
Chapter 3 - Conditions A to C
Full details of assets and risks held by the CFC in the accounting period and where those assets and risks are managed.
(In the case of condition C) Full details of the number, seniority, experience and remuneration of the directors and employees of the CFC together with the same information for people in the UK who manage any assets and/or risks held or borne by the CFC in the accounting period.
It will be necessary in some cases to provide a detailed functional analysis of where functions relating to assets and risks held by the CFC are carried out (see guidance on Chapter 4 (INTM200000) for further detail).
Full details of where assets falling within Chapter 5 were created and where the assets and their associated risks are managed in the first accounting period (see guidance on Chapter 5 at INTM203000 for further detail). Where there is any anticipated change in the management of the assets and risks details should be provided.
Full details of any previous or present capital investment from the UK to the CFC (see guidance on Chapter 5 at INTM203500 for further detail).
Details of average levels of regulatory capital plus additional margins of capital held by other group companies carrying on a similar activity compared to that of the CFC in the accounting period.
Documents or particulars outlining any regulatory requirements that have to be met by the CFC in its territory of residence in the accounting period or any other similar contracts or agreements.
Full details of any UK connected capital contributions made to the CFC in the accounting period or in previous accounting periods.
Full details of any qualifying loan relationships that have been made to the CFC in the accounting period (see INTM207000 for further detail).
A calculation of the CFC’s “relevant profits amount” computed as if the CFC was a permanent establishment in a territory outside the UK of a UK resident company or UK resident bank mentioned in sections 371CG(2)(b) or 371CG(3) (see INTM213000 for further detail).
Full details of the CFC’s “qualifying loan relationship profits” in the accounting period, including identification of the ultimate debtor in the case of each qualifying loan relationship.
Full details of the CFC’s business premises in its territory of residence in the accounting period and the activity undertaken at those premises in relation to the qualifying loan relationships.
Confirmation that none of the exclusions from the definition of a qualifying loan relationship in section 371IH apply. Where there potentially is an alternative interpretation of whether an exclusion within section 371IH might apply, please provide a full analysis in relation to the particular provision (see INTM216000 for further detail)
Further information required if exemption claimed for qualifying resources
The legislation is not prescriptive about the nature of evidence required to establish the source of funding for qualifying resources but it will be necessary to identify the separate strands of funding and establish the resources used in creating the relevant qualifying loan relationship.
Where the legislation allows indirect sources of funding to be taken into account, it will be necessary to submit evidence to show the historical path of structuring, financing and refinancing in order to establish the link between any previous qualifying resources and the ultimate qualifying loan relationship against which qualifying resources are claimed.
Full details of any UK debt incurred by a member of the CFC group with either a UK resident 3rd party or a non-UK resident person, which is made under or is otherwise connected with a qualifying loan relationship. Where the legislation allows indirect sources of funding to be taken into account, this includes earlier UK debt taken out for example to fund a buy out of minority share-holders in a 3rd party share for share exchange or to finance the payment of a dividend by a subsidiary overseas company.
Where a qualifying loan relationship has been funded from a pool of resources that includes both qualifying and non-qualifying resources see Chapter 9 guidance), the resource must be assumed to include a proportion of all the available funding sources. Accordingly a pro-rated computation of qualifying resources is required.
Further information required if exemption is claimed for “matched interest”
Full details of “the leftover profits”, “the relevant amounts” and computations to show that either all the leftover profits are exempt or a percentage of the leftover profits are exempt under section 371IE(3).