{
  "url": "https://openlegislation.uk/controlled-foreign-companies-excluded-banking-business-profits-regulations-2012/note",
  "json_url": "https://openlegislation.uk/controlled-foreign-companies-excluded-banking-business-profits-regulations-2012/note.json",
  "legislation": "uksi/2012/3041",
  "legislation_title": "The Controlled Foreign Companies (Excluded Banking Business Profits) Regulations 2012",
  "legislation_url": "https://openlegislation.uk/controlled-foreign-companies-excluded-banking-business-profits-regulations-2012",
  "path": "note",
  "kind": "note",
  "number": null,
  "heading": "Explanatory note",
  "text": "(This note is not part of the Regulations)\nThese Regulations are made in exercise of the powers conferred by section 371FD of the Taxation (International and Other Provisions) Act 2010 (c. 8) (“TIOPA”). The Regulations provide that if certain conditions are met then no controlled foreign company (“CFC”) charge will arise under Chapter 6 of Part 9A of TIOPA in respect of the banking profits of the CFC. A CFC charge is a tax on a UK resident company which has an interest in a CFC.\nRegulation 1 provides for citation, commencement and effect.\nRegulation 2 provides for interpretation.\nRegulation 3 disapplies Step 3 in section 371FA(1) of TIOPA in relation to a CFC’s trading finance profits in an accounting period of the CFC so far as they arise from banking business carried on by the CFC in relation to which the CFC is regulated in the territory in which it is resident. Regulation 3 applies if the conditions in regulation 4 are met. The effect of disapplying Step 3 is that no CFC charge will arise under Chapter 6 of Part 9A of TIOPA in respect of the banking profits of the CFC for the accounting period.\nRegulation 4 imposes three conditions. The first condition is that the CFC is a member of a UK banking group (its “parent group”) which is required by the Financial Services Authority to prepare consolidated financial information. The second condition is that the CFC’s tier one capital ratio at the end of the relevant accounting period does not exceed 125% of its parent group’s tier one capital ratio. The third condition is that it is reasonable to suppose that the CFC’s average tier one capital ratio during the relevant accounting period did not exceed 125% of its parent group’s tier one capital ratio.\nRegulation 5 provides formulae for calculating a CFC’s tier one capital ratio and its parent group’s tier one capital ratio.\nA Tax Information and Impact Note covering this instrument was published on 21 March 2012 alongside the draft Schedule 20 to the Finance Act 2012 (c. 8) and is available on the HMRC website at www.hmrc.gov.uk/budget2012/tiin-0724.pdf. It remains an accurate summary of the impacts that apply to this instrument.",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/uksi/2012/3041/note",
    "retrieved_at": "2026-10-29T01:11:16.515112+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}