Taxation (International and Other Provisions) Act 2010 section 371CB

Does Chapter 5 apply?

Section 371CB determines when Chapter 5 (non-trading finance profits) applies to a controlled foreign company's accounting period, and identifies certain categories of profit that are excluded from the non-trading finance profits calculation.

• Chapter 5 applies only if the CFC has non-trading finance profits, subject to the incidental profit rules in sections 371CC and 371CD
• Profits from investing trade funds or property business funds held by the CFC are excluded, provided the trade profits do not pass through the CFC charge gateway
• The trade and property fund exclusions do not apply where funds are held for restricted purposes such as avoiding distributions, contingency reserves, future share acquisitions, or tax reduction
• Where a chargeable company claims the Chapter 9 exemption for qualifying loan relationships, those qualifying loan relationship profits are also excluded from non-trading finance profits

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