Corporation Tax Act 2009 section 18HD

Modification of Chapter 7 of Part 9A of TIOPA 2010

Section 18HD makes a technical modification to the captive insurance business rules when they are applied to determine whether a foreign permanent establishment has diverted profits.

• The captive insurance business rules from the controlled foreign company (CFC) legislation are used when assessing diverted profits of a foreign permanent establishment.
• These rules help identify whether insurance profits earned abroad should be treated as diverted from the UK.
• When applying these captive insurance rules for diverted profits purposes, a specific exclusion that would normally apply under the CFC regime is switched off.
• The practical effect is that the diverted profits test applies the captive insurance gateway more broadly than it would operate in a standard CFC context.