D4.421 CFCs: assumptions to be made in computing profits
The following commentary sets out the corporation tax assumptions that are to be applied when determining a CFCs assumed taxable total profits, the corresponding UK tax (D4.415) and the creditable tax (D4.437)1.
Assumptions on residency, chargeability and company status
It is assumed that the CFC is UK resident at all times during the relevant accounting period, has been UK resident from the beginning of the its first accounting period and will continue to be UK resident until it ceases to be a CFC and the CFC is, has been and will continue to be, within the charge to UK corporation tax2.
For these purposes, it is not necessary to assume that there is any change in the location in which the CFC carries on its activities; this means that for the UK tax computation of profits, the CFC will be treated as undertaking its trading or business activities outside the UK. Additionally it is assumed that the CFC does not get the benefit of the exemption for FOTRA securities (D1.365)3.
In addition, it is assumed that a determination of the CFC's assumed taxable total profits has been made for all previous accounting
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