Corporation tax for ATX-UK - part 4: self-test answers

Test your understanding: answers

(1)Statement A is true. Statement B is true.
The low profits exemption applies where the CFC’s profits do not exceed £500,000. However, the exemption is not available if the company’s non-trading income exceeds £50,000. Statement B does not indicate the level of the company’s non-trading income, such that it may exceed £50,000.

(2)Statement A is false.
The tax exemption applies where the local tax paid by the CFC is at least 75% of the tax the CFC would have paid had it been resident in the UK.

Statement B is true.

(3). There will not be a CFC charge because JUV Ltd only owns 18% of the ordinary share capital of RTB Co, such that it is not entitled to at least 25% of its profits.