Corporation Tax Act 2009 section 18HC

Modification of Chapter 5 of Part 9A of TIOPA 2010

Section 18HC explains how the controlled foreign company (CFC) rules on non-trading finance profits are adapted when determining whether a foreign permanent establishment has diverted profits.

• The CFC non-trading finance profits rules (Chapter 5, Part 9A of TIOPA 2010) are used to help identify diverted profits of a foreign permanent establishment under section 18H(2).
• When applying these rules for this purpose, the basic rule in section 371EA(1) is simplified by removing the limiting words from "so far as" to the end of that subsection.
• The detailed provisions in sections 371EB to 371EE, which deal with UK activities, UK connected capital expenditure, group treasury companies, and leases to UK resident companies, are entirely excluded.
• The effect is to apply a broader, less restrictive version of the non-trading finance profits test when assessing diverted profits from a foreign branch.