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

The basic rule

Section 371EA establishes the basic rule for determining which non-trading finance profits of a controlled foreign company (CFC) pass through the CFC charge gateway under Chapter 5.

• Only the CFC's non-trading finance profits — such as interest, returns from lending, and similar investment income that is not part of a trade — can fall within Chapter 5 of the CFC charge gateway
• These profits are only caught if they fall within one or more of four specific categories set out in sections 371EB to 371EE: UK significant people functions, UK capital investment, UK-connected loan arrangements, and UK finance leases
• The definition of non-trading finance profits is drawn from section 371CB, which identifies the types of income that count as non-trading finance profits for these purposes
• Where non-trading finance profits fall into more than one of the four categories, they are still only charged once but must satisfy at least one category to be within scope