HMRC internal manual

International Manual

INTM255330 - Controlled Foreign Companies: exemptions ' the motive test - Application of motive test: ‘marginal and isolated failure’ of exempt activities and excluded countries exemptions

There will be cases where, in one accounting period, a controlled foreign company fails to satisfy by a marginal amount one of the arithmetical tests in either the exempt activities or excluded countries exemption. So long as it is both an isolated and marginal failure, it has always been the policy of HMRC to accept that the motive test should apply. This application of the motive test does not apply to any of the other exemptions