Corporation Tax Act 2009 section 18HB

Modification of Chapter 4 of Part 9A of TIOPA 2010

Section 18HB modifies the controlled foreign company (CFC) rules on profits attributable to UK activities when those rules are used to determine what counts as "diverted profits" of a foreign permanent establishment.

• The CFC charge gateway rules for UK-attributable profits are adapted for the purpose of identifying diverted profits of a foreign permanent establishment under section 18H(2)
• One specific category of arrangement that would normally be caught by the CFC gateway (section 371DA(3)(g)(i)) is excluded when applying these rules in the foreign PE context
• The trading profits exclusion test is widened so that it considers income arising in the United Kingdom, not just income arising in the relevant accounting period
• The definition of a "related" person is narrowed by removing two of the three categories (paragraphs (b) and (c) of section 371VF(3)), so that only the core definition applies