Section 371KB | The basic rule

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

(a)the CFC is resident (see section 371KC) in an excluded territory for the accounting period,

(b)the total of the following amounts is no more than the threshold amount for the accounting period (see section 371KD)—

(i)the CFC's category A income (if any) for the accounting period (see sections 371KE and 371KF),

(ii)the CFC's category B income (if any) for the accounting period (see section 371KG),

(iii)the CFC's category C income (if any) for the accounting period (see section 371KH), and

(iv)the CFC's category D income (if any) for the accounting period (see section 371KI),

(c)the IP condition is met (see section 371KJ), and

(d)the CFC is not, at any time during the accounting period, involved in an arrangement the main purpose, or one of the main purposes, of which is to obtain a tax advantage for any person.

(2)In this Chapter “excluded territory” means a territory specified as such in regulations made by the HMRC Commissioners.

(3)The HMRC Commissioners may also by regulations, in relation to CFCs resident in a specified excluded territory or to other specified cases, do one or more of the following—

(a)provide that one or both of the requirements set out in subsection (1)(b) and (c) does not have to be met in order for the excluded territories exemption to apply;

(b)modify one or both of those requirements, including by modifying any provision of this Chapter mentioned in subsection (1)(b) or (c);

(c)specify further requirements which must be met in order for the excluded territories exemption to apply.

(4)If an amount is included in more than one of the categories of income mentioned in subsection (1)(b)(i) to (iv), the amount is to be counted only once in determining if the threshold amount is exceeded.