INTM203620 - Controlled Foreign Companies: The CFC Charge Gateway Chapter 5 - Non-trading finance profits: Capital investment from the UK: Management Fee Deduction
The calculation of the non-trading finance profits that pass through the CFC charge gateway by virtue of them falling within Chapter 5 takes account of any expenditure or deduction that would be taken into account in calculating the CFC바카라 사이트™s assumed total profits. In arriving at the amount of non-trading finance profit that is attributable to capital investment from the UK, TIOPA10/S371EC(2) and (3) allow for an additional deduction that represents the difference (if any) between the arm바카라 사이트™s length fund management fee that it is reasonable to suppose would be charged for managing the funds or assets and the management expenditure actually incurred in realising the non-trading finance profit.
Where a deduction is taken for an arm바카라 사이트™s length management fee then TIOPA10/S371BA(3)(b) is effectively switched off, i.e. it is not possible to obtain a deduction for both the management fee and just and reasonable amounts in accordance with step 2 in section 4(2) of CTA 2010.
Example of arm바카라 사이트™s length management fee.
A CFC is wholly funded by share capital of £1bn issued to a UK group company. That share capital is used to fund a number of loans to overseas group companies. The assumed taxable total profits for the accounting period ended 31 December 2014 is £40m. That figure is arrived at after taking account of administration fees for the CFC바카라 사이트™s own staff and resources totalling £300,000, which relate to ongoing management functions associated with the loans. The group considers that the arm바카라 사이트™s length price that would be charged by a third party for the administration fees of £300,000 performed by the CFC would be £320,000. The difference of £20,000, between the administration fee actually charged and the amount that would be charged at arm바카라 사이트™s length is deducted from the amount of assumed total profits that pass through the Chapter 5 charge gateway.