Section 371DD | Exclusion: economic value

(1)Subsection (2) applies if—

(a)an asset or risk is included in the relevant assets and risks,

(b)the SPFs which are relevant to the economic ownership of the asset, or the assumption and management of the risk, are wholly or partly UK SPFs as determined at step 4 in section 371DB(1), and

(c)as a result of that determination, an amount is included in the provisional Chapter 4 profits.

(2)The amount is to be excluded from the provisional Chapter 4 profits if—

(a)the net economic value to the CFC group which results from the holding of the asset, or the bearing of the risk, exceeds what that value would have been had the asset been held, or the risk been borne, solely by UK resident companies connected with the CFC, and

(b)the relevant non-tax value is a substantial proportion of the excess value mentioned in paragraph (a).

(3)“Net economic value” does not include any value which derives (directly or indirectly) from the reduction or elimination of any liability of any person to tax or duty imposed under the law of any territory outside the United Kingdom.

(4)“The relevant non-tax value” is the excess value mentioned in subsection (2)(a) so far as it does not derive (directly or indirectly) from the reduction or elimination of any liability of any person to tax or duty imposed under the law of the United Kingdom.

(5)Subsection (6) applies if—

(a)there are SPFs which are relevant to the economic ownership of a number of assets, or the assumption and management of a number of risks, included in the relevant assets and risks, and

(b)it is not reasonably practicable to separate those assets or risks for the purpose of determining the extent to which the SPFs are relevant to the economic ownership of each of those assets, or the assumption and management of each of those risks, separately.

(6)In subsections (1) and (2) references to an asset or risk are to be read as references to those assets or risks taken together.