Finance Act 1982

136 Treatment of losses and charges on income

(1) In section 13 of the principal Act (treatment of oil extraction activities etc. for purposes of income tax and corporation tax) after subsection (2) there shall be inserted the following subsection—

“(2A) In any case where—

(a) in any chargeable period a person incurs a loss in activities (in this subsection referred to as " separate activities ") which, for that or any subsequent chargeable period, are treated by virtue of subsection (1) above as a separate trade for the purposes specified in that subsection, and

(b) in any subsequent chargeable period any of his trading income is derived from activities (in this subsection referred to as " related activities") which are not part of the separate activities but which, apart from subsection (1) above, would together with those activities constitute a single trade,

then, nothwithstanding anything in that subsection, the amount of the loss may be set off, in accordance with section 171 or section 177(1) of the Taxes Act, against so much of his trading income in any subsequent chargeable period as is derived from the related activities.”

(2) At the end of section 15 of the principal Act (oil extraction activities: charges on income) there shall be added the following subsection—

“(5) In any case where—

(a) such of the charges on income which are paid by a company and allowable under section 248 of the Taxes Act as, by virtue of the preceding provisions of this section, are not allowable against that part of the company's profits referred to in subsection (2) above exceed the remaining part of its profits (in this subsection referred to as the company's " non-oil profits "), and

(b) the amount of that excess is greater than the amount (if any) by which the total of the charges on income which are allowable to the company under that section exceeds the total of the company's profits,

then, for the purpose of enabling the company to surrender the excess referred to in paragraph (a) above by way of group relief, subsection (6) of section 259 of the Taxes Act shall have effect as if—

(i) the reference therein to the amount paid by the surrendering company by way of charges on income were a reference to so much of that amount as is allowable only against the company's non-oil profits; and

(ii) the reference therein to the surrendering company's profits were a reference to its non-oil profits alone.”

(3) The amendments made by subsections (1) and (2) above.—

(a) so far as they relate to corporation tax, shall be deemed to have had effect for accounting periods beginning before the passing of this Act and on or after 1st January 1980 and shall have effect for subsequent accounting periods; and

(b) so far as they relate to income tax, shall be deemed to have had effect for the years 1980-81 and 1981-82 and shall have effect for subsequent years of assessment ;

and accordingly subsection (1) above applies to losses incurred in any such accounting period or year of assessment and subsection (2) above applies to charges on income paid in any such accounting period.