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

Property business profits

Section 371VI defines what counts as "property business profits" for a controlled foreign company (CFC) and explains how certain financing and hedging items are included in those profits.

• Property business profits are the CFC's profits that would be taxable as property income under UK corporation tax rules if the CFC were a UK company.
• Interest costs (debits) and income (credits) on genuine borrowings used solely for a property business are included in the property business profits calculation, but not where the borrowing is used to fund onward lending or time-value-of-money arrangements.
• Credits and debits arising from derivative contracts or other hedging arrangements entered into to manage risk connected with the property business are also included, provided they are attributable to that hedging activity.
• A "relevant property business" means any UK or overseas property business of the CFC whose profits already form part of its property business profits before the financing and hedging adjustments.