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HMRC internal manual

International Manual

Controlled Foreign companies: Entity Exemptions: Chapter 10 - The Exempt Period Exemption: The basic rule

The exempt period exemption applies for a CFC’s accounting period if the following conditions are met

  1. the CFC’s accounting period ends during an exempt period (as defined by TIOPA10/Ss371JC and 371JD),
  2. the subsequent period condition (set out in TIOPA10/S371JB(2)) is met, and 
  3. the chargeable company condition (set out in TIOPA10/S371JB(3)) is met.

It is possible that a CFC may have more than one exempt period over time. The exemption is however subject to an anti-avoidance rule (see INTM224350).