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Finance Act 2012

Section 182: Supplementary Charge


1.Section 182 clarifies the definition of the scope of the supplementary charge (SC) set out in section 330 of Corporation Tax Act 2010 (CTA 2010). The section provides SC is charged by reference to a company’s ring fence profits.

2.This section has effect from 6 December 2011.

Details of the Section

3.Subsection (1) amends section 330 (2) of CTA 2010 by substituting “company’s ring fence profits” for “profits of the company’s ring fence trade”.

Background Note

4.The SC is chargeable on a company’s adjusted ring fence profits as if it were an amount of corporation tax chargeable on the company.

5.A company’s adjusted ring fence profits for an accounting period are currently defined in section 330(2) CTA 2010 as the profits of the company’s ring fence trade chargeable to corporation tax, on the assumption in subsection (3) that financing costs are left out of account.

6.It was Government’s intention when the legislation was introduced in 2002 that a company’s adjusted ring fence profits should include all profits that could arise to a company carrying on a ring fence trade from ring fence activities. In other words the intention was that the scope of the SC should match the scope of ring fence corporation tax (RFCT). This includes chargeable gains which can arise on the disposal of an interest in an oil licence.

7.It remains the Government’s view that under the existing law the scope of the SC does match the scope of RFCT. Government is however aware that some in industry take a different view and that they believe that chargeable gains fall outside the scope of the SC.

8.For this reason, this section clarifies the scope of the SC by ensuring that it matches that of RFCT, in accordance with the intention of the Government when the legislation was enacted in 2002.

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