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

UK activities

Section 371EB brings non-trading finance profits of a controlled foreign company (CFC) within the scope of the CFC charge where those profits are attributable to activities carried out in the UK.

• Non-trading finance profits of a CFC that are linked to UK activities can be caught by the CFC charge under Chapter 5.
• The calculation follows most of the same steps used for the general UK activities test in Chapter 4 (Steps 1 to 5 and 7), but applied specifically to non-trading finance profits rather than total assumed profits.
• Step 6 of the general calculation is deliberately excluded, which removes the rule that would otherwise let profits escape the charge when fewer than 50% of the significant people functions managing the relevant asset or risk are performed in the UK.
• The effect is that any non-trading finance profits attributable to UK activities are brought into charge regardless of the proportion of significant people functions carried out in the UK.