INTM216800 - Controlled Foreign Companies: The CFC charge gateway chapter 9 - exemptions for profits from qualifying loan relationships: scope of the rules: the chapter 9 claim
A chargeable company must make a claim to an officer of HMRC under TIOPA10/Part 9A/S371IA(2) in order for Chapter 9 to apply. Where a claim is made the rules in Chapter 9 apply by virtue of section 371CB(8) to all of the non- trading finance profits (바카라 사이트淣TFPs바카라 사이트� - INTM203000) arising from qualifying loan relationships (바카라 사이트淨LRs바카라 사이트� - INTM217000) of the CFC for the accounting period.
The full and 75% exemptions are given by way of an adjustment that is made to a CFC바카라 사이트檚 chargeable profits and creditable tax for an accounting period at step 2 of section 371BB(1). Section 371IA(3) provides that it is only those QLR profits that are not fully exempt under Chapter 9 that will form part of a CFC바카라 사이트檚 chargeable profits.
Example
A CFC has the following NFTPs arising in an accounting period
- 拢10m from loan A that is a QLR
- 拢20m from loan B that is a QLR
- 拢15m that are non-exempt distributions
A claim is made for Chapter 9 to apply, specifying that section 371IB (the full exemption) should apply to the profits in respect of loan A, exempting 90% of the NFTPs from that loan. Section 371ID (75% exemption) applies to loan B. As a result of the claim profits of 拢6m pass through the CFC charge gateway by way of Chapter 9 (拢1m from loan A and 拢5m from loan B); the remaining profits of 拢15m do not pass through the CFC gateway by way of Chapter 9 as the non-exempt distribution profits do not fall within section 302(1) CTA 2009. Instead the 拢15m non-exempt distributions will pass through the CFC gateway by way of Chapter 5 (on the assumption for this example that the profits fall within Chapter 5).