Corporation Tax Act 2010

[F1 Onshore allowance U.K.

Textual Amendments

F1 Pt. 8 Ch. 8 inserted (with effect in accordance with Sch. 15 paras. 6(1), 9(2) of the amending Act) by Finance Act 2014 (c. 26), Sch. 15 para. 3

356C Generation of onshore allowance U.K.

(1) Subsection (2) applies where a company incurs any relievable capital expenditure in relation to a qualifying site.

(2) The company is to hold an amount of allowance equal to 75% of the amount of the expenditure.

(3) “Qualifying site” means a site whose development (in whole or in part) is authorised for the first time on or after 5 December 2013.

(4) Capital expenditure incurred by a company is “relievable” only if, and so far as—

(a) it is incurred for the purposes of onshore oil-related activities (see section 356BA), and

(b) neither of the disqualifying conditions is met at the beginning of the day on which the expenditure is incurred (see section 356CA).

[F2 (4A) Subsections (1) to (4) are subject to section 356CAA (which prevents expenditure on the acquisition of an asset from being relievable in certain circumstances).]

(5) Allowance held under this Chapter is called “onshore allowance”.

(6) Onshore allowance is said in this Chapter to be “generated” at the time when the capital expenditure is incurred (see section 356JA).

(7) Onshore allowance is referred to in this Chapter as being generated—

(a) “by” the company concerned,

(b) “at” the site concerned.

(8) Where capital expenditure is incurred only partly for the purposes of onshore oil-related activities, or the onshore oil-related activities for the purposes of which capital expenditure is incurred are carried on only partly in relation to a particular site, the expenditure is to be attributed to the site concerned on a just and reasonable basis.

(9) In this section, references to authorisation of development of a site—

(a) in the case of a site which is an oil field, are to be read in accordance with [F3 section 356IB];

(b) in the case of a drilling and extraction site, are to be read in accordance with section 356J.

Textual Amendments

F2 S. 356C(4A) inserted (with effect in accordance with s. 61(4) of the amending Act) by Finance Act 2016 (c. 24), s. 61(2)

F3 Words in s. 356C(9)(a) substituted (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2015 (c. 11), Sch. 14 para. 5

356CA Disqualifying conditions for section 356C(4)(b) U.K.

(1) The first disqualifying condition is that production from the site is expected to exceed 7,000,000 tonnes.

(2) The second disqualifying condition is that production from the site has exceeded 7,000,000 tonnes.

(3) For the purposes of this section 1,100 cubic metres of gas at a temperature of 15 degrees celsius and pressure of one atmosphere is to be counted as equivalent to one tonne.

[F4 356CAA Expenditure on acquisition of asset: further disqualifying conditions U.K.

(1) Capital expenditure incurred by a company (“the acquiring company“) on the acquisition of an asset (“the acquisition concerned”) is not relievable capital expenditure for the purposes of section 356C if subsection (2), (3) or (8) applies to the asset.

(2) This subsection applies to the asset if capital expenditure incurred before the acquisition concerned, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset was relievable under section 356C.

(3) This subsection applies to the asset if—

(a) the asset—

(i) is the whole or part of the equity in a qualifying site, or

(ii) is acquired in connection with a transfer to the acquiring company of the whole or part of the equity in a qualifying site,

(b) capital expenditure was incurred before the acquisition concerned, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, and

(c) any of that expenditure—

(i) related to the qualifying site, and

(ii) would have been relievable under section 356C if this Chapter had been fully in force and had applied to expenditure incurred at that time.

(4) For the purposes of subsection (3)(a)(ii) it does not matter whether the asset is acquired at the time of the transfer.

(5) In subsection (3)(c) “this Chapter” means the provisions of this Chapter as those provisions have effect at the time when the capital expenditure mentioned in subsection (1) is incurred.

(6) The reference in subsection (3)(c)(i) to the qualifying site includes an area that, although not a qualifying site when the expenditure mentioned in subsection (3)(b) was incurred, subsequently became the qualifying site.

(7) Where expenditure mentioned in subsection (3)(b) related to an area which subsequently became the qualifying site, the following sub-paragraph is to be treated as substituted for subsection (3)(c)(ii)—

“(ii) would have been relievable under section 356C if the area in question had been a qualifying site when the expenditure was incurred, or if the area in question had been such a site at that time and this Chapter had been fully in force and had applied to expenditure incurred at that time.”

(8) This subsection applies to the asset if—

(a) capital expenditure mentioned in subsection (1) would, in the absence of this section, be relievable under section 356C by reason of an election under section 356CB (treatment of expenditure not related to an established site), and

(b) capital expenditure which was incurred before the acquisition concerned, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, either—

(i) has become relievable under section 356C by reason of an election under section 356CB, or

(ii) would be so relievable if such an election were made in respect of that expenditure.

(9) In determining for the purposes of subsection (8)(b) whether particular expenditure was incurred “before” the acquisition concerned—

(a) paragraph (b) of section 356CB(6) is to be ignored, and

(b) accordingly, that expenditure is to be taken (for the purposes of determining whether it was incurred before the acquistion concerned) to have been incurred when it was actually incurred.

(10) For the purposes of subsection (8)(b)(ii) it does not matter if an election is not in fact capable of being made.]

Textual Amendments

F4 S. 356CAA inserted (with effect in accordance with s. 61(4) of the amending Act) by Finance Act 2016 (c. 24), s. 61(3)

356CB Expenditure not related to an established site U.K.

(1) A company may make an election under this section in relation to capital expenditure incurred by it for the purposes of onshore oil-related activities if the appropriate condition is met.

(2) The appropriate condition is that at the time of the election no site can be identified as a site in relation to which the expenditure has been incurred.

(3) An election may not be made before the beginning of the third accounting period of the company after that in which the expenditure is incurred.

(4) An election must specify—

(a) the expenditure in question,

(b) a site (“the specified site”) every part of which is, or is part of, an area in which the company is a licensee, and

(c) an accounting period of the company (“the specified accounting period”).

(5) The specified accounting period must not be earlier than the accounting period in which the election is made.

(6) Where a company makes an election under this section in relation to an amount of expenditure, that amount is treated for the purposes of this Chapter as incurred by the company—

(a) in relation to the specified site, and

(b) at the beginning of the specified accounting period.]