INTM248400 - Controlled Foreign Companies: Definitions for terms in Part 9A: Alphabetic index of terms defined in Part 9A: Non-trading finance profits

TIOPA10/S371VG(1) defines non-trading finance profits. Such profits include any amounts included in a CFC’s assumed total profits for the accounting period on the basis that they would be chargeable to corporation tax under:

  • (charge to tax on non-trading profits from loan relationships); or
  • CTA09/Part9A (company distributions); or
  • which are included in the CFC’s assumed total profits for the accounting period in question and which arise from a relevant finance lease but which are not trading profits.

TIOPA10/S371VG(2) provides that non-trading finance profits does not include:

  • profits arising from the investment of funds held by the CFC for the purposes of a trade, so far as none of the CFC’s trading profits in the accounting period pass through the CFC charge gateway;
  • profits arising from the investment of funds held by the CFC for the purposes of a property business carried on by the CFC;
  • profits falling within Chapter 8; and
  • in the case of a chargeable company that makes a claim under Chapter 9 (for the purposes of Chapters 3 and 5) qualifying loan relationship profits.

Any credits or debits brought into account in determining a CFC’s property business profits for the accounting period are also excluded from the definition of non-trading finance profits. »Ê¹ÚÌåÓýappse are profits of the CFC arising from debtor relationships that have been entered into for the purposes of the exempt property business rather than for the purposes of on-lending to any other person.

For the purposes of Chapter 9 (Exemptions for Profits from Qualifying Loan Relationships), profits that fall within the first three bullet points above, and profits arising from a relevant finance lease, are not included in the CFC’s non-trading finance profits.

Non-trading finance profits will however include the trading and non-trading finance profits of a treasury company that has issued a notice to that effect to HMRC under TIOPA10/S371CE. »Ê¹ÚÌåÓýappse profits are then excluded from the definition of trading finance profits by TIOPA10/S371VG(5).