Corporation Tax Act 2009 section 870

Assumptions for calculating chargeable profits

Section 870 sets out special rules that apply when calculating the chargeable profits of a controlled foreign company (CFC) for the purposes of the intangible fixed assets regime.

• When a controlled foreign company's chargeable profits are being calculated under the CFC rules, special assumptions must be made for the intangible fixed assets provisions in this Part of the Act.
• The CFC is treated as if it were a UK resident company for the purposes of applying the intangible fixed assets rules, ensuring the same framework applies as would apply to a domestic company.
• This section effectively bridges the intangible fixed assets regime and the controlled foreign company regime, so that profits arising from intangible assets held by a CFC can be properly computed and, where appropriate, attributed to the UK parent company.
• The provision was amended by Finance Act 2012 to align with the modernised CFC rules introduced in that Act, replacing the previous regime under which chargeable profits of CFCs were calculated.