Citation, commencement and effect

1. These Regulations may be cited as the Controlled Foreign Companies (Excluded Countries) (Amendment No. 2) Regulations 2005, shall come into force on 31st March 2005, and have effect in relation to accounting periods of companies resident outside the United Kingdom beginning on or after that date.

Amendment of the Controlled Foreign Companies (Excluded Countries) Regulations 1998

2. —(1) Amend regulation 4 of the Controlled Foreign Companies (Excluded Countries) Regulations 1998( 2 ) (limitation on apportionment of chargeable profits of a controlled foreign company — conditions to be satisfied) as follows.

(2) Before paragraph (1) insert the following paragraphs—

“ (A1) Paragraph (A2) specifies the condition which is required to be satisfied as respects an accounting period by a controlled foreign company, wherever it is resident in that accounting period.

(A2) The condition specified in this paragraph is that, during the accounting period, the company has not been involved in a scheme or arrangement the purpose, or one of the main purposes, of which is to achieve a reduction in United Kingdom tax.

• In this paragraph—

• “arrangement” means an arrangement of any kind, whether in writing or not; and

• “United Kingdom tax” means corporation tax or any tax chargeable as if it were corporation tax. ” .

Transitional provision

3. Where an accounting period of a company resident outside the United Kingdom—

(a) would, without amendment, have ended on or after 31st March 2005, but

(b) is amended on or after that date so as end before that date,

an accounting period of the company shall, for the purposes of Controlled Foreign Companies (Excluded Countries) Regulations 1998, be treated as having ended on that date.