Corporation Tax Act 2010 section 938M

Controlled foreign companies

Section 938M ensures that the group mismatch scheme rules apply properly where one or more of the companies involved is a controlled foreign company (CFC).

• The normal CFC rule that treats a CFC as not being a member of any group for tax purposes is switched off for the group mismatch scheme provisions.
• This means a CFC can be recognised as part of a group when applying the group mismatch scheme rules in this Part of the Act.
• References to a company recording debits or credits under the loan relationships or derivative contracts rules (Parts 5 and 7 of CTA 2009) include amounts used in calculating the CFC's assumed taxable total profits.
• This extends to situations where the calculation concludes that the CFC has no assumed taxable total profits at all.