Klubb plc:
– Is a UK resident trading company.
– Has been charged a penalty in respect of the late filing of corporation tax returns.
– Intends to establish an approved tax-efficient share plan.
– Purchased 30% of the ordinary share capital of Hartz Co from Mr Deck on 1 April 2014.

Hartz Co:
– Is resident in the country of Suta.
– Mr Deck continues to own 25% of the company’s ordinary share capital.
– Kort Co, a company resident in the country of Suta, owns the remaining 45%.

Budgeted results of Hartz Co for the year ending 31 March 2015:
– Trading profits of £330,000.
– Chargeable gains of £70,000.
– All of Hartz Co’s profits have been artificially diverted from the UK.
– Hartz Co will pay corporation tax at the rate of 11% in the country of Suta.
– Hartz Co will not pay a dividend for the year ending 31 March 2015.

Required:
(c) (i) Explain whether or not Hartz Co will be regarded as a controlled foreign company (CFC) for the year ending 31 March 2015 and the availability or otherwise of the low profits exemption. (4 marks)