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HMRC internal manual

International Manual

Controlled Foreign companies: Entity Exemptions: Chapter 10 - The Exempt Period Exemption: Extension to the exempt period granted

Where a CFC has claimed, and been granted by HMRC, an extension to the normal 12 month exempt period the same approach applies as for a 12 month exempt period, recognising that the profits relating to the whole of an extended exempt period are potentially exempt. The amount of potentially exempt chargeable profits must be calculated by apportioning profits from any accounting period which falls partly within the extended exempt period.

The period by which the subsequent period condition is to be tested remains the first full accounting period immediately following the end of the exempt period.


A CFC’s exempt period begins on 1 July 2013. The CFC’s accounting periods run from 1 July to 30 June (12 month periods). The exempt period would be 1 July 2013 to 30 June 2014.

This is subject to the subsequent period condition being met, and the subsequent period would be the accounting period 1 July 2014 to 30 June 2015.

However, the group applies for, and HMRC agrees to, an extended exempt period of 18 months. The Exempt period now becomes 1 July 2013 to 31 December 2014.

This is still subject to the subsequent period condition being met. The subsequent period is the first accounting period which ends after the end of the (extended) exempt period. The subsequent period is now 1 July 2015 to 30 June 2016.