Part 2Charge to corporation tax: basic provisions
F1CHAPTER 3AUK RESIDENT COMPANIES: PROFITS OF FOREIGN PERMANENT ESTABLISHMENTS
Anti-diversion rule
18HF2What 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 X 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,
as 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
that 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 activities.
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 those 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).
Pt. 2 Ch. 3A inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 4, 31