F1PART 9AControlled foreign companies
Chapter 3The CFC charge gateway: determining which (if any) of Chapters 4 to 8 applies
371CDIncidental non-trading finance profits: the further 5% rule
(1)
This section applies in relation to a CFC's accounting period if—
(a)
the requirements of section 371CC(1)(a) and (b) are both met, but
(b)
the CFC's non-trading finance profits (as added to under section 371CC(5) if applicable) are more than 5% of the relevant amount for the purposes of section 371CC(2).
(2)
Chapter 5 does not apply for the accounting period if the CFC's adjusted non-trading finance profits are no more than 5% of the total of the CFC's exempt distribution income (as defined in section 371CC(9)).
(3)
The CFC's “adjusted non-trading finance profits” are its non-trading finance profits excluding any profits falling within section 371CB(3) or (4).
(4)
Subsection (5) applies if any CFC subsidiary's relevant non-trading finance profits are added under section 371CC(5) to the CFC's non-trading finance profits for the purposes of section 371CC(2).
(5)
The CFC subsidiary's relevant non-trading finance profits are also to be added to the CFC's adjusted non-trading finance profits for the purposes of subsection (2) above.