835W. Exempt period exemption

(1) In this section—

‘exempt period’ shall be construed in accordance with subsection (3);

‘subsequent period condition’ means the condition which is satisfied where the circumstances specified in subsection (4) apply.

(2) Section 835R shall not apply in relation to an accounting period of a controlled foreign company where—

(a) the accounting period ends during an exempt period, and

(b) the subsequent period condition is satisfied by the controlled foreign company.

(3) An exempt period shall begin when a company first becomes a controlling company in relation to the controlled foreign company concerned (in this section referred to as the ‘relevant time’) and shall end 12 months from the relevant time.

(4) The subsequent period condition shall be satisfied by a controlled foreign company where—

(a) the company ceases to be regarded as a controlled foreign company in accordance with Chapter 1, or

(b) the controlled foreign company charge does not apply,

in the first accounting period of the company beginning immediately after the exempt period.

(5) Where the accounting period of a controlled foreign company begins during an exempt period, but does not end during that period, the undistributed income of the controlled foreign company, as determined on a just and reasonable basis, which—

(a) arises during the exempt period, and

(b) would otherwise be subject to the controlled foreign company charge under section 835R,

shall be exempt from such charge.

(6) This section shall not apply in relation to a controlled foreign company where—

(a) immediately before the relevant time the controlled foreign company was not carrying on a business, unless subsection (7) applies to that company, or

(b) the controlling company in respect of the controlled foreign company was subject to this Part (as respects the controlled foreign company) on 1 January 2019.

(7) This subsection shall apply to a controlled foreign company where—

(a) the controlled foreign company is incorporated or formed immediately before the relevant time for the purpose of controlling one or more other companies, and

(b) an exempt period begins in relation to one or more of the companies, referred to in paragraph (a), controlled by the controlled foreign company at that relevant time.

(8) This section shall not apply in relation to a controlled foreign company where—

(a) any arrangements are entered into, and

(b) it would be reasonable to consider that the main purpose, or one of the main purposes, of the arrangements is to secure—

(i) a tax advantage for any person, or

(ii) that subsection (2), would, apart from this subsection, apply.