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

Adjustments to accounting profits

Section 371VD sets out the adjustments that must be made to a controlled foreign company's (CFC's) accounting profits for an accounting period, including items to exclude, items to include, and transfer pricing considerations.

• Exempt distributions, property business profits or losses, and capital profits or losses must all be excluded from the CFC's accounting profits
• Income accruing to settlement trustees (where the CFC is a settlor or beneficiary) and the CFC's share of partnership income must be included, apportioned on a just and reasonable basis
• Transfer pricing rules under Part 4 of TIOPA 2010 must be applied to the accounting profits calculation, but only if the resulting adjustment exceeds £50,000
• Partnerships include overseas entities with similar characteristics to a UK partnership, and where a settlement has multiple settlors or beneficiaries, income is apportioned between them on a just and reasonable basis