F1PART 9AControlled foreign companies
C1Chapter 5The CFC charge gateway: non-trading finance profits
Pt. 9A Ch. 5 applied (with modifications) by 2009 c. 4, s. 18HC (as substituted (with effect in accordance with Sch. 20 para. 55(2) of the amending Act) by Finance Act 2012 (c. 14), Sch. 20 para. 6)
371ECCapital investment from the UK
1
Non-trading finance profits fall within this section so far as they arise from relevant UK funds or other assets.
2
Subsection (3) applies in relation to any profits which (apart from subsection (3)) would fall within this section if—
a
an amount of expenditure incurred by the CFC in managing the relevant UK funds or other assets itself was brought into account in calculating the profits, and
b
it is reasonable to suppose that the amount of expenditure is less than the fee which a company not connected with the CFC would charge the CFC for carrying out the same management activities.
3
There is to be deducted from the profits an amount representing what it is reasonable to suppose the difference between the amount of expenditure and the fee would be.
4
“Relevant UK funds or other assets” means—
a
funds or other assets which represent, or derive (directly or indirectly) from, any capital contribution to the CFC made (directly or indirectly) by a UK connected company (whether in relation to an issue of shares in the CFC or otherwise),
b
funds or other assets which represent, or derive (directly or indirectly) from, any amounts included in the CFC's chargeable profits for any earlier accounting period in relation to which the CFC charge is charged,
c
funds or other assets which represent, or derive (directly or indirectly) from, any amounts which, by virtue of section 174 (transfer pricing: claims by disadvantaged person), are left out of account in determining the CFC's assumed total profits for the accounting period or any earlier accounting period, or
d
funds or other assets—
i
which represent, or derive (directly or indirectly) from, any funds or other assets received by the CFC (directly or indirectly) from a UK connected company, and
ii
which are not covered by paragraphs (a) to (c).
5
In subsection (4)(d)(i) the reference to funds or other assets received by the CFC does not include funds or other assets received—
a
in exchange for goods or services provided by the CFC, or
b
by way of a loan.
6
“UK connected company” means—
a
a UK resident company connected with the CFC, or
b
a non-UK resident company connected with the CFC acting through a UK permanent establishment.
Pt. 9A inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 1 (with ss. 56-58)