Section 371JB | The basic rule

(1)The exempt period exemption applies for a CFC's accounting period if—

(a)the accounting period ends during an exempt period of the CFC (see sections 371JC and 371JD),

(b)the subsequent period condition is met, and

(c)the chargeable company condition is met.

(2)The subsequent period condition is met if—

(a)the CFC does not cease to be a CFC before having at least one accounting period which begins after the end of the exempt period, and

(b)section 371BC (charging the CFC charge) does not apply in relation to the CFC's first accounting period to begin after the end of the exempt period (see section 371BA(2)).

(3)The chargeable company condition is met if, at all times during the relevant period—

(a)the charging condition in section 371JC is met, and

(b)each company which would be a chargeable company for the purposes of that condition is an original chargeable company or is connected with an original chargeable company.

(4)In subsection (3)—

“original chargeable company” means a company which, for the purposes of the charging condition in section 371JC, would be a chargeable company at the beginning of the exempt period, and

“the relevant period” means the period which—

(a)begins immediately after the beginning of the exempt period, and

(b)ends at the end of the CFC's first accounting period to begin after the end of the exempt period.

(5)This section is subject to section 371JF (anti-avoidance).