INTM219150 - Controlled Foreign Companies: »Ê¹ÚÌåÓýapp CFC Charge Gateway Chapter 9 - Exemptions for profits from Qualifying Loan Relationships: Matched Interest Rule: When does the matched interest rule apply

»Ê¹ÚÌåÓýapp matched interest rule in TIOPA10/Part 9A/S371IE applies for an accounting period when:

  1. there remain non-trading finance profits (“NTFPs� - INTM203000) in respect of qualifying loan relationships (“QLRs� -INTM217000) of the CFC that are not exempt after the application of sections 371IB and 371ID (these are referred to as the “leftover profits�); and
  2. (apart from the application of this section) profits under Chapters 5, 6 or 9 would be apportioned to a UK resident group company and would be added to that company’s financing income for the purposes of the worldwide debt cap rules (under section 314A); and
  3. the “tested income amount� (TIA) for the group (taken from the calculation under worldwide debt cap rules and including amounts added under section 314A) exceeds the “tested expense amount� (TEA) of the group (again taken from the calculation under the worldwide debt cap rules).

»Ê¹ÚÌåÓýapp extent to which the leftover profits will be exempt will depend on the make-up of the figure of tested income amount, taking account of amounts that would otherwise be added to the UK group companies financing income amounts.

»Ê¹ÚÌåÓýapp matched interest rules make use of certain calculated amounts from the worldwide debt cap rules in TIOPA10/Part 7.