Taxation (International and Other Provisions) Act 2010 section 371JC

When does an exempt period begin?

Section 371JC sets out the conditions that must be satisfied for an exempt period to begin in relation to a controlled foreign company (CFC), including the initial condition, the charging condition, and the requirement that no CFC charge arose in the preceding 12 months.

• An exempt period begins when the CFC meets the initial condition, the charging condition is met at that point, and no CFC charge arose in the previous 12 months
• The initial condition requires either that the CFC was already carrying on a business immediately before the relevant time, or that it was newly incorporated to control companies expected to qualify for the exemption
• The charging condition is met if, treating the relevant time as a standalone accounting period, there would be at least one chargeable company in relation to the CFC's profits
• The relevant preceding period is the 12 months immediately before the relevant time, but any part of that period before the company existed is disregarded