(14) If two or more persons jointly have an interest in a company
otherwise than in a fiduciary or representative capacity, they are
taken to have the interest in equal shares.

371VI Property business profits

(1) 5Subject to what follows, in this Part “property business profits”, in
relation to a CFC, means any profits included in the CFC’s assumed
total profits for the accounting period in question on the basis that
they would be chargeable to corporation tax under Part 4 of CTA
2009 (property income).

(2) 10Any credits or debits—

(a) which are brought into account under Part 5 of CTA 2009 in
determining the CFC’s assumed total profits for the
accounting period, and

(b) which fall within subsection (3) or (5),

15are to be brought into account in determining the CFC’s property
business profits.

(3) Credits and debits fall within this subsection so far as they are from
a debtor relationship of the CFC where the loan which is the subject
of the debtor relationship—

(a) 20is made and used solely for the purposes of a relevant
property business, and

(b) is not used to any extent for the purpose of funding (directly
or indirectly)—

(i) a loan to any other person, or

(ii) 25so far as not covered by sub-paragraph (i), an
arrangement intended to produce for any person a
return in relation to any amount which it is
reasonable to suppose would be a return by reference
to the time value of that amount of money.

(4) 30In subsection (3) “debtor relationship” has the meaning given by
section 302(6) of CTA 2009 (and does not include anything which,
although not falling within section 302(1) of that Act, is treated for
any purpose as if it were a debtor relationship); and “loan” is to be
read accordingly.

(5) 35Credits and debits fall within this subsection so far as they—

(a) are from any derivative contract or other arrangement
entered into by the CFC as a hedge of risk in connection with
a relevant property business, and

(b) are attributable to that hedge of risk.

(6) 40“Relevant property business” means a UK property business or
overseas property business of the CFC, profits of which are included
in the CFC’s property business profits apart from subsection (2).

371VJ Regulations

Regulations under this Part may contain incidental, supplemental,
45consequential and transitional provision and savings.”

Part 2 Foreign permanent establishments

Main provision

2 Chapter 3A of Part 2 of CTA 2009 (foreign permanent establishments of UK
5resident companies) is amended as follows.

3 In section 18A(1) omit “UK resident”.

4 After section 18C insert—

“18CA Income arising from immovable property

The references in section 18A(6) to profits which would be taken to
10be attributable to the permanent establishment of a company in a
territory include any income arising from immovable property
which has been used for the purposes of the business carried on by
the company through the permanent establishment in the territory
(to such extent as is appropriate having regard to the extent to which
15it has been so used); and the references to losses in section 18A(7) are
to be construed accordingly.

18CB Profits and losses from investment business

(1) In determining any relevant profits amount or relevant losses
amount under section 18A(6) or (7) in relation to a company, there
20are to be left out of account any profits or losses of any part of the
company’s business which consists of the making of investments.

(2) Subsection (1) does not apply to profits or losses arising from assets
so far as the assets are effectively connected with any part of the
permanent establishment through which a trade or overseas
25property business of the company is carried on in the territory.

(3) In subsection (2) “effectively connected” is to be given the same
meaning as it would be given for the purposes of the OECD model
were subsection (2) contained in the OECD model.”

5 (1) Section 18F is amended as follows.

(2) 30In subsection (1)(a) for “subsection (6)” substitute “subsections (6) to (8)”.

(3) For subsection (2) substitute—

“(2) The relevant day”, in relation to an election made by a UK resident
company, means—

(a) the day on which, at the time of the election, the company’s
35accounting period following that in which the election is
made is expected to begin, or

(b) if the election is made before the company’s first accounting
period, the day on which that accounting period begins.

(2A) “The relevant day”, in relation to an election made by a non-UK
40resident company, means the day on which the company becomes
UK resident.”

(4) In subsection (6) for “The election can be revoked” substitute “An election
can be revoked by the company which made it”.

(5) After subsection (6) insert—

“(7) An election made by a UK resident company is revoked if the
5company ceases to be UK resident.

(8) An election made by a non-UK resident company is revoked if,
having become UK resident, the company ceases to be UK resident.”

6 For sections 18G to 18I substitute—

“18G Anti-diversion rule

(1) 10This section applies for the purposes of this Chapter for any relevant
accounting period (“period X”) of a company (“company X”) in
relation to a territory outside the United Kingdom (“territory X”) if—

(a) there is an adjusted relevant profits amount in relation to
territory X for period X,

(b) 15the adjusted relevant profits amount includes diverted
profits (see section 18H), and

(c) none of the exemptions mentioned in section 18I applies for
period X.

(2) The diverted profits are to be left out of the adjusted relevant profits
20amount.

(3) For the purposes of this Chapter “adjusted”, in relation to a relevant
profits amount, is what the relevant profits amount would be if it
were determined without reference to gains or losses which are
chargeable gains or allowable losses for corporation tax purposes.

18H 25 What are “diverted profits”?

(1) In section 18G(1)(b) “diverted profits” means so much of company
X’s total profits of period X as pass through the diverted profits
gateway.

(2) To determine the extent to which company X’s total profits of period
30X pass through the diverted profits gateway, apply—

(a) section 371BB of TIOPA 2010 (controlled foreign companies:
the CFC charge gateway), and

(b) except Chapter 8 of Part 9A of that Act, the other provisions
referred to in that section,

35as if references to the CFC charge gateway were references to the
diverted profits gateway.

(3) In applying section 371BB of TIOPA 2010 and the other provisions
referred to in it assume—

(a) that company X is a CFC resident in territory X,

(b) 40that period X is the CFC’s accounting period, and

(c) that company X’s total profits of period X are the CFC’s
assumed total profits for the accounting period.

(4) Subsection (3)(a) does not require it to be assumed that there is any
change in the place or places at which company X carries on its
45activities.

(5) Section 371BB of TIOPA 2010 and the other provisions referred to in
it are also to be applied subject to sections 18HA to 18HE below.

(6) In this section—

(a) references to company X’s total profits of period X are to
5those profits ignoring this Chapter and step 2 in section 4(3)
of CTA 2010, and

(b) references to section 371BB of TIOPA 2010 are to that section
omitting subsection (2)(b).

18HA Modification of Chapter 3 of Part 9A of TIOPA 2010

10Chapter 3 of Part 9A of TIOPA 2010 (the CFC charge gateway:
determining which of Chapters 4 to 8 applies) applies for the
purposes of section 18H(2) with the omission of—

(a) section 371CA(10)(a),

(b) in section 371CB(2), the words “or Chapter 8 (solo
15consolidation)”,

(c) section 371CC(1)(b), (3)(b) and (c), (4) to (7), (9) and (10),

(d) section 371CD,

(e) section 371CE(2) to (9), and

(f) section 371CG.

18HB 20 Modification of Chapter 4 of Part 9A of TIOPA 2010

(1) Chapter 4 of Part 9A of TIOPA 2010 (the CFC charge gateway: profits
attributable to UK activities) applies for the purposes of section
18H(2) with the following modifications.

(2) The modifications are—

(a) 25section 371DA(3)(g)(i) is to be omitted, and

(b) in section 371DH(4), after “the accounting period”, in the
second place it occurs, there is to be inserted “or the United
Kingdom”.

(3) Section 371VF(3) of TIOPA 2010 (definition of “related” person) is to
30be applied as relevant with the omission of paragraphs (b) and (c).

18HC Modification of Chapter 5 of Part 9A of TIOPA 2010

Chapter 5 of Part 9A of TIOPA 2010 (the CFC charge gateway: non-
trading finance profits) applies for the purposes of section 18H(2)
with the omission of—

(a) 35in section 371EA(1), the words from “so far as” to the end, and

(b) sections 371EB to 371EE.

18HD Modification of Chapter 7 of Part 9A of TIOPA 2010

Chapter 7 of Part 9A of TIOPA 2010 (the CFC charge gateway:
captive insurance business) applies for the purposes of section
4018H(2) with the omission of section 371GA(6)(b).

18HE Modification of Chapter 9 of Part 9A of TIOPA 2010

(1) Chapter 9 of Part 9A of TIOPA 2010 (exemptions for profits from
qualifying loan relationships) applies for the purposes of section
18H(2) with the following modifications.

(2) In section 371IA(2) and (11) the reference to a chargeable company is
to be read as a reference to company X (as is the reference in section
371CB(8)); and references elsewhere in Chapter 9 to company C are
to be read as references to company X.

(3) 5For section 371IA(5) there is to be substituted—

“(5) 75% of the profits of each qualifying loan relationship are
“exempt” under this Chapter.”

(6) In section 371IA(9)(a) the words “or Chapter 8 (solo consolidation)”
are to be omitted.

(7) 10Sections 371IB to 371IE are to be omitted.

(8) Section 371IH(11)(a) is to be read ignoring the modification in section
18HC(b) above.

(9) In section 371IJ references to the relevant corporation tax accounting
period are to be read as references to period X and subsection (6) is
15to be omitted.

18I Exemptions from anti-diversion rule

(1) The exemptions referred to in section 18G(1)(c) are the exemptions
set out in Chapters 11 to 14 of Part 9A of TIOPA 2010 (controlled
foreign companies: exemptions from the CFC charge).

(2) 20In applying those Chapters for the purposes of section 18G(1)(c)—

(a) references to section 371BA(2)(b) of TIOPA 2010 are to be
read as references to section 18G(1)(c),

(b) the assumptions set out in subsection (3) are to be made, and

(c) section 371VF(3) of TIOPA 2010 (definition of “related”
25person) is to be read with the omission of paragraphs (b) and
(c).

(3) For the purposes of subsection (2)(b), assume—

(a) that the permanent establishment which company X has in
territory X is a separate company from company X,

(b) 30that the separate company is a CFC resident in territory X,

(c) that period X and company X’s other accounting periods for
corporation tax purposes are accounting periods of the CFC
for the purposes of Part 9A of TIOPA 2010,

(d) that the CFC’s assumed total profits for period X are the
35adjusted relevant profits amount,

(e) that the CFC’s assumed taxable total profits for period X are
the same as the CFC’s assumed total profits for period X,

(f) that the CFC is connected with company X and is also
connected or associated with any person with whom
40company X is connected or associated, and

(g) that any person who has an interest in company X also has an
interest in the CFC.

(4) Chapters 11 to 14 of Part 9A of TIOPA 2010 are also to be applied
subject to sections 18IA to 18ID below.

18IA The excluded territories exemption

(1) Chapter 11 of Part 9A of TIOPA 2010 (controlled foreign companies:
the excluded territories exemption) applies for the purposes of
section 18G(1)(c) with the following modifications.

(2) 5Sections 371KB(1)(b)(iii) and 371KH are to be omitted.

(3) Section 371KC is to be omitted and the assumption set out in section
18I(3)(b) above in relation to the CFC’s residence is to be applied
instead; and references to “the CFC’s territory” are to be read
accordingly.

(4) 10Section 371KD(3) is to be omitted and references to a CFC’s
accounting profits for an accounting period are to be read as
references to the adjusted relevant profits amount.

(5) Section 371KE(2)(b) is to be omitted.

(6) Section 371KF is to be omitted.

(7) 15In section 371KG(3) the reference to the CFC’s equity or debt is to be
read as a reference to company X’s equity or debt (ignoring the
assumption in section 18I(3)(a) above).

(8) Section 371KI(2) and (3) is to be omitted.

(9) In section 371KJ—

(a) 20in subsection (2)(a), the reference to intellectual property held
by the CFC is to be read as a reference to intellectual property
held by company X (ignoring the assumption in section
18I(3)(a) above), and

(b) in subsections (2)(b) and (c) and (4), references to the CFC are
25to be read as references to company X (ignoring that
assumption).

18IB The low profits exemption

Chapter 12 of Part 9A of TIOPA 2010 (controlled foreign companies:
the low profits exemption) applies for the purposes of section
3018G(1)(c) with the omission of section 371LB(2) and (4) and section
371LC(5) and (6).

18IC The low profit margin exemption

(1) Chapter 13 of Part 9A of TIOPA 2010 (controlled foreign companies:
the low profit margin exemption) applies for the purposes of section
3518G(1)(c) with the following modifications.

(2) In section 371MB—

(a) subsection (2) is to be omitted, and

(b) references to the CFC’s accounting profits for an accounting
period are to be read as references to the adjusted relevant
40profits amount determined before any deduction for interest.

18ID The tax exemption

(1) Chapter 14 of Part 9A of TIOPA 2010 (controlled foreign companies:
the tax exemption) applies for the purposes of section 18G(1)(c) with
the following modifications.

(2) At step 1 in section 371NB(1)—

(a) in the first paragraph, the reference to section 371TB of
TIOPA 2010 is to be read as a reference to the assumption in
section 18I(3)(b) above relating to the CFC’s residence, and

(b) 5the second paragraph is to be omitted.

(3) References to the CFC’s local chargeable profits arising in the
accounting period are to be read as references to the adjusted
relevant profits amount and, accordingly, sections 371NB(4) and
371NC(2) to (4) are to be omitted.

(4) 10For the purposes of step 3 in section 371NB(1) the amount of the
corresponding UK tax for the accounting period is to be determined
in accordance with subsection (5) below; and section 371NE is to be
omitted accordingly.

(5) “The corresponding UK tax” is the amount of corporation tax which
15would be payable in respect of the adjusted relevant profits amount
if it were subject in full to corporation tax, ignoring any credit which
would be allowed against it under section 18(3) of TIOPA 2010 and
assuming, where there is more than one rate of corporation tax
applicable to period X, that it were chargeable at the average rate
20over period X.”

7 After section 18P(2) insert—

“(3) Subsection (2) does not apply in relation to—

(a) a chargeable gain accruing on the disposal of an asset used,
and used only, for the purposes of a trade so far as carried on
25by the company in the relevant foreign territory through the
company’s permanent establishment there, or

(b) a chargeable gain accruing on the disposal of currency or of a
debt within section 252(1) of TCGA 1992 where the currency
or debt is or represents money in use for the purposes of a
30trade so far as carried on by the company in the relevant
foreign territory through the company’s permanent
establishment there.”

Lloyd’s underwriters

8 In Chapter 5 of Part 4 of FA 1994 (Lloyd’s underwriters) after section 227B
35insert—

“227C Exemption for profits or losses of foreign permanent establishments

(1) This section applies for the purposes of section 18A(6) and (7) of the
Corporation Tax Act 2009 (exemption for profits or losses of foreign
permanent establishments: “relevant profits amount” and “relevant
40losses amount”).

(2) Any regulations made under section 229(1)(d) below are to be
ignored.

(3) Profits or losses which are taken to arise to a corporate member in an
underwriting year from its membership of one or more syndicates
45are to be left out of account in relation to any relevant accounting
period so far as they are profits or losses of a previous underwriting

year which began before the relevant day (as defined in section 18F
of the 2009 Act (effect of election under section 18A)).

(4) Profits or losses arising to a corporate member from assets forming
part of a premium trust fund which are taken to be profits or losses
of an underwriting year are to be left out of account in relation to any
5relevant accounting period so far as they are allocated under the
rules or practice of Lloyds to a previous underwriting year which
began before the relevant day (as defined in section 18F of the 2009
Act).”

Plant and machinery allowances

9 10In section 15 of CAA 2001 (plant and machinery allowances: qualifying
activities) after subsection (2A) insert—

“(2B) Subsection (2A) does not apply to the business so far as it consists of
a plant or machinery lease under which the company is a lessor if any
profits or losses arising from the lease are to be left out of account as
15mentioned in section 18C(3) of CTA 2009.”

Part 3 Other amendments

TMA 1970

10 TMA 1970 is amended as follows.

11 20In section 55 (recovery of tax not postponed) in subsection (1) omit
paragraph (d).

12 In section 59E (provision about when corporation tax due and payable) in
subsection (11) for paragraph (b) substitute—

“(b) to any sum charged on a company at step 5 in section
25371BC(1) of TIOPA 2010 (controlled foreign companies) as if
it were an amount of corporation tax;”.

13 In section 59F (arrangements for paying tax on behalf of group members) in
subsection (6) for paragraph (b) and the “and” after it substitute—

“(b) a sum charged on a company at step 5 in section 371BC(1) of
30TIOPA 2010 (controlled foreign companies) as if it were an
amount of corporation tax, and”.

ICTA

14 In ICTA omit Chapter 4 of Part 17 (controlled foreign companies).

FA 1998

15 35FA 1998 is amended as follows.

16 In section 32 (unrelieved surplus advance corporation tax) for subsection (5)
substitute—

“(5) The provision which may be made by regulations under this section
includes provision for or in connection with enabling unrelieved

surplus advance corporation tax to be set against liability to a sum
charged at step 5 in section 371BC(1) of the Taxation (International
and Other Provisions) Act 2010 (controlled foreign companies) as if
it were an amount of corporation tax for an accounting period.”

17 (1) Schedule 18 (company tax returns) is amended as follows.

(2) 5In paragraph 1 for “section 747(4)(a) of the Taxes Act 1988 (tax on profits of
controlled foreign company)” substitute “step 5 in section 371BC(1) of the
Taxation (International and Other Provisions) Act 2010 (controlled foreign
companies)”.

(3) In paragraph 8(1), in the third step, for paragraph 2 substitute—

10“2. Any sum charged at step 5 in section 371BC(1) of the Taxation
(International and Other Provisions) Act 2010 (controlled foreign
companies).”

FA 2000

18 Schedule 22 to FA 2000 (tonnage tax) is amended as follows.

19 (1) 15Paragraph 54 is amended as follows.

(2) In sub-paragraph (1)—

(a) for “under section 747 of the Taxes Act 1988” substitute “at step 5 in
section 371BC(1) of the Taxation (International and Other
Provisions) Act 2010 (“TIOPA 2010”)”,

(b) 20for “controlled foreign company” (in both places) substitute “CFC”,
and

(c) at the end insert “; and, accordingly, the tonnage tax company is not
to be a chargeable company for the purposes of Part 9A of TIOPA
2010 in relation to the CFC’s accounting period in question.”

(3) 25For sub-paragraphs (2) to (5) substitute—

“(2) In relation to a CFC which—

(a) is a member of a tonnage tax group, and

(b) is a tonnage tax company by virtue of the group’s tonnage
tax election, or would be if it were within the charge to
30corporation tax,

the corporation tax assumptions within the meaning of Part 9A of
TIOPA 2010 are to be taken to include the following assumption.

(3) The CFC is to be assumed to be a single company that is a tonnage
tax company.

(4) 35Nothing in section 371SL(1) of TIOPA 2010 affects sub-paragraphs
(2) and (3) above.

(5) In this paragraph “CFC” has the same meaning as in Part 9A of
TIOPA 2010.”

20 (1) Paragraph 57 is amended as follows.

(2) 40In sub-paragraph (1)(b) for the words from “controlled” to the end substitute
“CFC apportioned to the company at step 3 in section 371BC(1) of the
Taxation (International and Other Provisions) Act 2010.”

(3) For sub-paragraph (4) substitute—

“(4) For the purposes of sub-paragraph (1)(b)—

(a) “tonnage profits” means so much of the CFC’s chargeable
profits for its accounting period in question as, applying
5the corporation tax assumptions, are calculated in
accordance with paragraph 4 of this Schedule; and

(b) so much of those chargeable profits as are tonnage profits
shall be treated as apportioned at step 3 in section 371BC(1)
of the Taxation (International and Other Provisions) Act
102010 in the same proportions as those profits (taken
generally) are apportioned.

(4A) In sub-paragraphs (1)(b) and (4) terms defined in Part 9A of the
Taxation (International and Other Provisions) Act 2010 have the
same meaning as in that Part.”

15FA 2002

21 In FA 2002 omit section 90 (controlled foreign companies and treaty non-
resident companies).

ITA 2007

22 (1) Section 725 of ITA 2007 (transfer of assets abroad: reduction in amount
20charged where controlled foreign company involved) is amended as
follows.

(2) For subsection (1) substitute—

“(1) This section applies if—

(a) under Part 9A of TIOPA 2010 (controlled foreign companies),
25the CFC charge is charged in relation to a CFC’s accounting
period, and

(b) apart from this section, the amount of income treated as
arising to an individual under section 721 for a tax year
would be or include a sum forming part of the CFC’s
30chargeable profits for that accounting period.”

(3) In subsection (2)—

(a) for “controlled foreign company’s” (in both places) substitute
“CFC’s”, and

(b) in the definition of “CA” for “chargeable amount” substitute “CFC’s
35chargeable profits for that accounting period so far as apportioned to
chargeable companies at step 3 in section 371BC(1) of TIOPA 2010”.

(4) For subsection (3) substitute—

“(3) Terms used in this section which are defined in Part 9A of TIOPA
2010 have the same meaning as in that Part.”

40FA 2007

23 (1) Paragraph 3 of Schedule 11 to FA 2007 (technical provision made by
insurers) is amended as follows.