Commentary

D4.428 CFC gateway: trading finance profits

Corporate tax
Corporate tax | Commentary

D4.428 CFC gateway: trading finance profits

Corporate tax | Commentary

D4.428 CFC gateway: trading finance profits

This gateway test targets trading profits arising within financial trading CFC's which are attributable to over capitalisation of the CFC1. Profits pass through the CFC charge gateway if excess free capital and/or free assets is present (the CFC holds more than it would if it were not controlled by any other company) and there is UK capital investment. It captures the trading profits to the extent it is reasonable to suppose it is attributable to the lower of the above two amounts.

It is necessary to firstly establish in what situations this gateway test applies and then if it does, the extent to which profits pass through the gateway. Only profits which pass through the gateway are potentially liable to the CFC charge.

Establishing whether the test applies

This gateway test applies if the CFC has trading finance profits and funds or other assets which derive from UK connected capital contributions2. Trading finance profits of a group treasury company can be

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