Section 18H — Corporation Tax Act 2009: What are “diverted profits”?

What are “diverted profits”? 18H 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).