F1PART 9AControlled foreign companies

Chapter 3The CFC charge gateway: determining which (if any) of Chapters 4 to 8 applies

371CEDoes Chapter 6 apply?

(1)

Subject to what follows, Chapter 6 (trading finance profits) applies for a CFC's accounting period if (and only if)—

(a)

the CFC has trading finance profits, and

(b)

at any time during the accounting period, the CFC has funds or other assets which derive (directly or indirectly) from UK connected capital contributions.

(2)

The CFC's trading finance profits are to be treated for the purposes of this Part as if they were non-trading finance profits (and, accordingly, Chapter 6 cannot apply for the accounting period) if—

(a)

the CFC is a group treasury company in the accounting period, and

(b)

a notice is given to an officer of Revenue and Customs requesting that the CFC's trading finance profits be treated as if they were non-trading finance profits.

(3)

Profits treated as non-trading finance profits under subsection (2) are not to be taken to fall within section 371CB(3) or (4).

F2(4)

The CFC is a “group treasury company” in the accounting period if, assuming the relevant period were the accounting period—

(a)

the CFC would be a group treasury company in the relevant period in accordance with section 316(2) (group treasury companies), and

(b)

throughout the relevant period, the requirements of section 316(3)(a) and (b) would be met in relation to the CFC as a group treasury company.

(5)

For the purpose of applying section 316 in accordance with subsection (4)—

(a)

section 316(2) applies with the omission of paragraph (d), and

(b)

section 337(1) (definition of “the worldwide group”) applies with the omission of paragraph (a).

(6)

A notice under subsection (2)(b)—

(a)

may be given only by a company or companies determined under subsection (7) or (8), and

(b)

must be given—

(i)

within 20 months after the end of the accounting period, or

(ii)

within such longer period as an officer of Revenue and Customs may allow.

(7)

A company may give a notice if—

(a)

the company would be a chargeable company were section 371BC (charging the CFC charge) to apply in relation to the accounting period, and

(b)

the percentage of the CFC's chargeable profits which would be apportioned to the company at step 3 in section 371BC(1) would represent more than half of X%.

(8)

Two or more companies may together give a notice if—

(a)

the companies would all be chargeable companies were section 371BC (charging the CFC charge) to apply in relation to the accounting period, and

(b)

the percentage of the CFC's chargeable profits which would be apportioned to the companies, taken together, at step 3 in section 371BC(1) would represent more than half of X%.

(9)

In subsections (7) and (8) “X%” means the total percentage of the CFC's chargeable profits which would be apportioned to chargeable companies at step 3 in section 371BC(1) were section 371BC (charging the CFC charge) to apply in relation to the accounting period.