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Establishing whether the test applies

Chapter 3 sets out the queries to be answered in ascertaining whether the Chapter 4 gateway applies. The default position is that this gateway test applies to all CFCs. However if one of the following conditions is met, then it will not apply¹:

1. Ìý

   •ÌýÌýÌýÌý Condition A — it does not have UK tax minimisation as a main purpose — ie at no time in the accounting period does the CFC hold assets or bear risks under an arrangement, the main purpose, or one of the main purposes, of which is to reduce/eliminate any liability to UK tax and as a result of the arrangement the CFC expects its business to be more profitable than it would otherwise be

2. Ìý

   •ÌýÌýÌýÌý Condition B — the CFC has no UK managed assets and bears no UK managed risks at any time during the accounting period

3. Ìý

   •ÌýÌýÌýÌý Condition C — the CFC has itself the capability throughout the accounting period to ensure that its business would