Corporation Tax Act 2010

[F1 Post-commencement additional supplement U.K.

Textual Amendments

F1 Pt. 8 Ch. 5A inserted (with effect in accordance with Sch. 14 para. 4 of the amending Act) by Finance Act 2014 (c. 26), Sch. 14 para. 1

329N Supplement in respect of post-commencement period U.K.

(1) A qualifying company which incurs an onshore ring fence loss (see section 329P) in any post-commencement period may claim supplement under this section (“post-commencement additional supplement”) in respect of—

(a) that period, or

(b) any subsequent accounting period in which it carries on its ring fence trade.

(2) Any post-commencement additional supplement allowed on a claim in respect of a post-commencement period is to be treated for the purposes of the Corporation Tax Acts (other than the post-commencement additional supplement provisions) as if it were a loss—

(a) which is incurred in carrying on the ring fence trade in that period, and

(b) which falls in whole to be used under section 45 (carry forward of trade loss against subsequent trade profits) to reduce trading income from the ring fence trade in succeeding accounting periods.

(3) Paragraph 74 of Schedule 18 to FA 1998 (company tax returns etc: time limit for claims for group relief) applies in relation to a claim for post-commencement additional supplement as it applies in relation to a claim for group relief.

(4) In this Chapter “the post-commencement additional supplement provisions” means this section and sections 329O to 329T.

329O Amount of post-commencement additional supplement for a post-commencement period U.K.

(1) The amount of the post-commencement additional supplement for any post-commencement period in respect of which a claim under section 329N is made is the relevant percentage for that period of the reference amount for that period.

(2) Sections 329P to 329T have effect for the purpose of determining the reference amount for a post-commencement period.

(3) If the post-commencement period is a period of less than 12 months, the amount of the post-commencement additional supplement for the period (apart from this subsection) is to be reduced proportionally.

329P Onshore ring fence losses U.K.

(1) If—

(a) in a post-commencement period (“the period of the loss”) a qualifying company carrying on a ring fence trade consisting solely of onshore oil-related activities incurs a loss in the trade, and

(b) some or all of the loss falls to be used under section 45 (carry forward of trade loss against subsequent profits) to reduce trading income from the trade in succeeding accounting periods,

so much of the loss as falls to be so used is an “onshore ring fence loss” of the company.

This is subject to subsection (4).

(2) If—

(a) in a post-commencement period (“the period of the loss”) a qualifying company carrying on a ring fence trade consisting of both onshore oil-related activities and offshore oil-related activities incurs a loss in the trade, and

(b) some or all of the loss falls to be used under section 45 (carry forward of trade loss against subsequent profits) to reduce trading income from the trade in succeeding accounting periods,

the appropriate proportion of so much of the loss as falls to be so used is an “onshore ring fence loss” of the company.

This is subject to subsection (4).

(3) “The appropriate proportion” means such proportion as it is just and reasonable to attribute to the company's onshore oil-related activities carried out in the course of its ring fence trade.

(4) In the case of a straddling period—

(a) the amount of the onshore ring fence loss determined under subsection (1) or (2) in respect of the period is apportioned between so much of that period as falls before 5 December 2013 and so much of it as falls on or after that date, on the basis of the number of days in each part, and

(b) only so much of the loss as is apportioned to the later part of the period is an onshore ring fence loss of the company for the straddling period.

(5) But if the basis of the apportionment in subsection (4)(a) would work unjustly or unreasonably in the company's case, the company may elect for the apportionment to be made on another basis that is just and reasonable and specified in the election.

(6) In determining for the purposes of the post-commencement additional supplement provisions how much of a loss incurred in a ring fence trade falls to be used as mentioned in subsection (1)(b) or (2)(b), the following assumptions are to be made.

(7) The first assumption is that every claim is made that could be made by the company under section 37 (relief for trade losses against total profits) to deduct losses incurred in the ring fence trade from ring fence profits of post-commencement periods which are earlier than the period of the loss.

(8) The second assumption is that (where appropriate) section 42 (ring fence trades: further extension of period for relief) applies in relation to every such claim under section 37.

(9) This section has effect for the purposes of the post-commencement additional supplement provisions.

329Q The onshore ring fence pool U.K.

(1) For the purpose of determining the amount of any post-commencement additional supplement, a qualifying company is to be taken at all times in its post-commencement periods to have a continuing mixed pool (the “onshore ring fence pool”) of—

(a) the company's onshore ring fence losses,

(b) post-commencement supplement under Chapter 5,

(c) post-commencement additional supplement under this Chapter.

(2) The onshore ring fence pool continues even if the amount in it is nil.

(3) The onshore ring fence pool consists of—

(a) the company's onshore ring fence losses, allocated to the pool in accordance with subsection (4)(a),

(b) the company's post-commencement supplement allowed under Chapter 5, allocated to the pool in accordance with subsections (4)(b) and (5) to (7), and

(c) the company's post-commencement additional supplement allowed under this Chapter, allocated to the pool in accordance with subsection (4)(c).

(4) The allocation to the pool is made as follows—

(a) the amount of an onshore ring fence loss is added to the pool in the period of the loss,

(b) if any post-commencement supplement is allowed on a claim under Chapter 5 in respect of a post-commencement period, the appropriate proportion of the amount of that supplement is added to the pool in that period, and

(c) if any post-commencement additional supplement is allowed on a claim under this Chapter in respect of a post-commencement period, the amount of that supplement is added to the pool in that period.

(5) “The appropriate proportion” is—

(a) if the ring fence trade carried on by the company includes, or has at any time included, offshore oil-related activities, such proportion of the supplement as it is just and reasonable to attribute (directly or indirectly) to the company's onshore oil-related activities carried on in the period for which the supplement is allowed or an earlier post-commencement period, and

(b) in any other case, 100%.

(6) In the case of a straddling period—

(a) the appropriate proportion of the post-commencement supplement allowed on a claim under Chapter 5 in respect of the period is apportioned between so much of that period as falls before 5 December 2013 and so much of it as falls on or after that date, on the basis of the number of days in each part, and

(b) only so much of the appropriate proportion of the supplement as is apportioned to the later period is added to the pool under subsection (4)(b).

(7) But if the basis of the apportionment in subsection (6)(a) would work unjustly or unreasonably in the company's case, the company may elect for the apportionment to be made on another basis that is just and reasonable and specified in the election

(8) The amount in the onshore ring fence pool is subject to reductions in accordance with the following provisions of this Chapter.

(9) If a reduction in the amount in the onshore ring fence pool falls to be made in any accounting period, the reduction is made—

(a) after the addition to the pool of—

(i) the amount of any onshore ring fence losses allocated to the pool in that period in accordance with subsection (4)(a), and

(ii) any amount of post-commencement supplement under Chapter 5 claimed in respect of the period and allocated to the pool in accordance with subsection (4)(b), but

(b) before determining and adding to the pool under subsection (4)(c) the amount of any post-commencement additional supplement under this Chapter claimed in respect of the period,

and references to the amount in the pool are to be read accordingly.

329R Reductions in respect of utilised onshore ring fence losses U.K.

(1) If one or more losses incurred by a qualifying company in its ring fence trade in a post-commencement period are used under section 45 (carry forward of trade loss against subsequent trade profits) to reduce any profits of a post-commencement period, a reduction is to be made in that period in accordance with this section.

(2) To the extent that the losses used as mentioned in subsection (1) are onshore ring fence losses, the amount in the onshore ring fence pool is to be reduced (but not below nil) by setting against it a sum equal to such amount of those onshore ring fence losses as is so used.

(3) For the purposes of determining the extent to which losses used as mentioned in subsection (1) are onshore ring fence losses, relevant offshore losses are to be treated as so used in priority to onshore ring fence losses.

(4) For this purpose “relevant offshore loss” means so much (if any) of a loss used as mentioned in subsection (1) as is given by—

where—

X is the amount of the loss so used, and

Y is so much of that loss as (ignoring section 329P(4)) is an onshore ring fence loss.

(5) In the case of a loss incurred in a straddling period—

(a) the amount of the relevant offshore loss is apportioned between so much of that period as falls before 5 December 2013 and so much of it as falls on or after that date, on the basis of the number of days in each part, and

(b) only so much of the loss as is apportioned to the later part of the period is a relevant offshore loss of the company for the straddling period.

(6) But if the basis of the apportionment in subsection (5)(a) would work unjustly or unreasonably in the company's case, the company may elect for the apportionment to be made on another basis that is just and reasonable and specified in the election.

329S Reductions in respect of unrelieved group ring fence profits U.K.

(1) If there is an amount of unrelieved group ring fence profits for a post-commencement period, reductions are to be made in that period in accordance with this section.

(2) After making any reductions that fall to be made in accordance with section 329R, the remaining amount in the onshore ring fence pool is to be reduced (but not below nil) by setting against it a sum equal to the aggregate of the amounts of unrelieved group ring fence profits for the period.

This is subject to subsection (4).

(3) If the post-commencement period is a straddling period, the unrelieved group ring fence profits for that period are to be determined as if the period began on 5 December 2013 and ended at the same time as the straddling period.

(4) If the ring fence trade carried on by the company includes, or has at any time included, offshore oil-related activities, the sum to be set against the onshore ring fence pool under subsection (2) is first to be reduced by the notional offshore loss pool.

(5) “The notional offshore loss pool” means—

(a) the sum of the relevant offshore losses (see section 329R(4)) for the post-commencement period mentioned in subsection (1) and earlier post-commencement periods, less

(b) the sum of—

(i) so much of those losses as is to be treated (see section 329R(3)) as used as mentioned in section 329R, and

(ii) any reductions previously made under subsection (2) of this section.

329T The reference amount for a post-commencement period U.K.

For the purposes of section 329O the reference amount for a post-commencement period is so much of the amount in the onshore ring fence pool as remains after making any reductions required by sections 329R and 329S.]