Introduction Details of the Schedule Part 5.Transitional Provision
585.Paragraph 56 applies to the first accounting period of a CFC as determined in accordance with paragraph 49(2) or 50(4) of the commencement provisions i.e. an accounting period of a CFC either beginning on 1 January 2013 or a CFC’s first accounting period beginning after that date. It links references to a CFC’s first accounting period in section 371SD(6) (UK residence), section 371SK(3) (intangible fixed assets) and section 371SM(3) (capital allowances)_ to the above periods by stating that a CFC should be assumed to have become a CFC at the time stipulated by either paragraph 49(2) or 50(4).
586.Paragraph 57 refers to elections under section 9A of CTA 2010, i.e. designated currency elections made under the corporation tax assumptions in Chapter 19. The paragraph ensures that any such election that has been made at a time before the commencement of the new CFC rules and that is still valid on the commencement of a CFC’s first accounting period can be assumed to continue to be effective under Part 9A.
587.Paragraph 58 applies to CFCs which are subject to the temporary period of exemption contained in Part 3A of Schedule 25 of ICTA (i.e. the current CFC rules), where that period continues after the end of the last accounting period for which the current CFC rules apply. This transitional provision ensures that the exempt period under the current CFC rules ends at the same time as it would have under those rules.
588.Paragraph 58(1) sets out the basic requirements for the transitional provision to apply, which are that:
	an exempt period under the current CFC rules began before 1 January 2013;
	the exempt period does not end before the end of the last accounting period under the current CFC rules; and
	the new CFC rules apply to the company at the start of the first accounting period under Part 9A of TIOPA (i.e. the new CFC rules).
589.Sub-paragraph (2) determines that the remainder of the exempt period is treated as an exempt period under Chapter 10 of the new CFC rules (the exempt period exemption).
590.Sub-paragraph (3) provides for the remainder of the exempt period to be determined in accordance with the current CFC rules as set out in paragraph 15F of Schedule 25 to ICTA. For this purpose, the current CFC rules are assumed to continue to apply, and the new CFC rules at section 371JD regarding the length of the exempt period are disregarded.
591.Sub-paragraph (4) adapts the application of section 371JB so that an accounting period is exempt if it ends during an exempt period. The other conditions in section 371JB are omitted for the purposes of this transitional provision.
592.Sub-paragraph (5) adapts the application of section 371JE, so that if an exempt period comes to an end during an accounting period, any profits that arise during that exempt period can be exempted from charge under the new CFC rules. The other conditions of section 371JE are omitted for the purposes of this transitional provision.
593.Sub-paragraph (6) in effect disapplies the anti-avoidance provisions at section 371JF for the purposes of this transitional exemption. The anti-avoidance rules in Part 3A of Schedule 25 to ICTA will continue to apply for the purposes of this transitional provision.
594.Paragraph 59 provides that the CFC (Designer Rate Tax Provisions) Regulations 2000 (S.I. 2000/3158) will continue to have effect under the new CFC rules and that the power of the HMRC Commissioners to make regulations under section 371ND includes the power to revoke or amend these Regulations for the purposes of that section.