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

What are "assumed taxable total profits" and "assumed total profits"?

Section 371SB defines two key measures of a CFC's profits — "assumed taxable total profits" and "assumed total profits" — and sets out how settlement income is dealt with when calculating those profits.

• A CFC's assumed taxable total profits are what its taxable total profits would be if it were a UK corporation tax payer, applying the corporation tax assumptions but excluding chargeable gains.
• Where a CFC is a settlor or beneficiary of a settlement, income accruing to the settlement trustees must be included in the CFC's profits, apportioned on a just and reasonable basis if there is more than one settlor or beneficiary.
• To prevent double counting, any dividend or distribution the CFC actually receives that derives from settlement income already included is excluded, and settlement income is not taxed on both a beneficiary CFC and a settlor CFC.
• A CFC's assumed total profits are the same as its assumed taxable total profits but calculated before deducting any reliefs against total profits.