Section 371DE | Exclusion: independent companies' arrangements

(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),

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

(d)the UK SPFs are carried out by companies connected with the CFC under arrangements made between the CFC and those companies.

(2)The amount is to be excluded from the provisional Chapter 4 profits if it is reasonable to suppose that, were the SPFs which are UK SPFs not to be carried out by companies connected with the CFC, the CFC would enter into arrangements with companies not connected with the CFC which—

(a)would be structured in the same way as the arrangements mentioned in subsection (1)(d), and

(b)would, in relation to the CFC's business, have the same commercial effect as those arrangements.

(3)Subsection (4) 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.

(4)In subsection (1) references to an asset or risk are to be read as references to those assets or risks taken together.