Corporation Tax Act 2010

[F1Pre-commencement additional supplementU.K.

Textual Amendments

F1Pt. 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

329IAdditional supplement in respect of a pre-commencement accounting periodU.K.

(1)If—

(a)a qualifying company incurs qualifying pre-commencement onshore expenditure in respect of a ring fence trade, and

(b)the expenditure is incurred before the commencement period,

the company may claim additional supplement under this section (“pre-commencement additional supplement”) in respect of one or more pre-commencement periods.

This is subject to section 329F(3)(b).

(2)Any pre-commencement additional supplement allowed on a claim in respect of a pre-commencement period is to be treated as expenditure—

(a)which is incurred by the company in the commencement period, and

(b)which is allowable as a deduction in calculating the profits of the ring fence trade for that period.

(3)The amount of the additional supplement for any pre-commencement period in respect of which a claim under this section is made is the relevant percentage for that period of the reference amount for that period.

(4)Sections 329J to 329M have effect for the purpose of determining the reference amount for a pre-commencement period.

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

(6)Any claim for pre-commencement additional supplement in respect of a pre-commencement period must be made as a claim for the commencement period.

(7)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 pre-commencement additional supplement as it applies in relation to a claim for group relief.

329JThe mixed pool of qualifying pre-commencement onshore expenditure and supplement previously allowedU.K.

(1)For the purpose of determining the amount of any pre-commencement additional supplement, a qualifying company is to be taken to have had, at all times in the pre-commencement periods of the company, a continuing mixed pool of—

(a)qualifying pre-commencement onshore expenditure,

(b)pre-commencement supplement under Chapter 5, and

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

(2)The pool is to be taken to have consisted of—

(a)the company's qualifying pre-commencement onshore expenditure, allocated to the pool for each pre-commencement period in accordance with subsection (3),

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

(c)the company's pre-commencement additional supplement allowed under this Chapter, allocated to the pool in accordance with subsection (8).

(3)To allocate qualifying pre-commencement onshore expenditure to the pool for any pre-commencement period, take the following steps—

  • Step 1 Count as eligible expenditure for that period so much of the qualifying pre-commencement onshore expenditure mentioned in section 329I(1) as was incurred in that period.

  • Step 2 Find the total of all the eligible expenditure for that period (amount E).

  • Step 3 If section 329K (reduction in respect of disposal receipts under CAA 2001) applies, reduce amount E in accordance with that section.

  • Step 4 If section 329L (reduction in respect of unrelieved group ring fence profits) applies, reduce (or, as the case may be, further reduce) amount E in accordance with that section. And so much of amount E as remains after making those reductions is to be taken to have been added to the pool in that period.

(4)If any pre-commencement supplement is allowed on a claim under Chapter 5 in respect of a pre-commencement period, the appropriate proportion of that supplement is to be taken to have been added to the pool in that period.

(5)The appropriate proportion” means—

(a)if, before the end of the pre-commencement period, the company has incurred qualifying pre-commencement expenditure (within the meaning of section 312) on offshore oil-related activities, such proportion of the pre-commencement supplement under Chapter 5 as it is just and reasonable to attribute (directly or indirectly) to the company's qualifying pre-commencement onshore expenditure, and

(b)in any other case, 100%.

(6)In the case of a straddling period—

(a)the appropriate proportion of the pre-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 taken to have been added to the pool under subsection (4).

(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)If any pre-commencement additional supplement is allowed on a claim under this Chapter in respect of a pre-commencement period, the amount of that supplement is to be taken to have been added to the pool in that period.

329KReduction in respect of disposal receipts under CAA 2001U.K.

(1)This section applies in the case of the qualifying company if—

(a)it incurs qualifying pre-commencement onshore expenditure in respect of a ring fence trade in any pre-commencement period,

(b)it would, on the relevant assumption, be entitled to an allowance under any provision of CAA 2001 in respect of that expenditure,

(c)an event occurs in relation to any asset representing the expenditure in any pre-commencement period, and

(d)the event would, on the relevant assumption, require a disposal value to be brought into account under any provision of CAA 2001 for any pre-commencement period.

(2)The relevant assumption is that the company was carrying on the ring fence trade—

(a)when the expenditure was incurred, and

(b)when the event giving rise to the disposal value occurred.

(3)For the purpose of allocating qualifying pre-commencement onshore expenditure to the pool for each pre-commencement period—

(a)find the total amount of the disposal values in the case of all such events (amount D), and

(b)taking later periods before earlier periods, reduce (but not below nil) amount E for any pre-commencement period by setting against it so much of amount D as does not fall to be set against amount E for a later pre-commencement period.

(4)Where the asset represented by the qualifying pre-commencement onshore expenditure is a mixed-activities asset, subsection (3) applies as if the disposal value required to be brought into account as mentioned in subsection (1)(d) were such proportion of the actual disposal value as is just and reasonable having regard to that expenditure.

(5)The asset is a “mixed-activities asset” if it also represents expenditure on offshore oil-related activities which is incurred by the company in a pre-commencement period and in respect of which the company would, on the relevant assumption, be entitled to an allowance under any provision of CAA 2001.

329LReduction in respect of unrelieved group ring fence profitsU.K.

(1)This section applies if there is an amount of unrelieved group ring fence profits for a pre-commencement period.

(2)For the purpose of allocating qualifying pre-commencement onshore expenditure to the pool for that period—

(a)find so much (if any) of amount E for that period as remains after any reduction falling to be made under section 329K (“the amount of the net onshore expenditure”), and

(b)reduce the amount of the net onshore expenditure (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.

(3)If the pre-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)Subsection (5) applies where in the pre-commencement period the company carries on both onshore oil-related activities and offshore oil related activities.

(5)The sum to be set against the net onshore expenditure under subsection (2)(b) is first to be reduced (but not below nil) by the amount of the company's net offshore expenditure for the period.

(6)“The net offshore expenditure” of the company for the period is determined as follows—

  • Step 1 Determine the amount of the company's total pre-commencement offshore expenditure incurred in the period.

  • Step 2 Make any reduction in that amount required by subsection (9).

So much as remains is the net offshore expenditure of the company for the period.

(7)Pre-commencement offshore expenditure” means expenditure which—

(a)is incurred in the course of oil extraction activities which are offshore oil-related activities, and

(b)meets Conditions A, C and D in section 329G.

(8)Subsection (9) applies if—

(a)the qualifying company incurs pre-commencement offshore expenditure in respect of a ring fence trade in any pre-commencement period,

(b)it would, on the relevant assumption in section 329K, be entitled to an allowance under any provision of CAA 2001 in respect of that expenditure,

(c)an event occurs in relation to any asset representing the expenditure in any pre-commencement period, and

(d)the event would, on that assumption, require a disposal value to be brought into account under any provision of CAA 2001 for any pre-commencement period.

(9)For the purposes of Step 2 in subsection (6)—

(a)find the total amount of the disposal values in the case of all such events (amount D), and

(b)taking later periods before earlier periods, reduce (but not below nil) the amount of pre-commencement offshore expenditure for any pre-commencement period by setting against it so much of amount D as does not fall to be set against that total for a later pre-commencement period.

(10)Where the asset represented by the pre-commencement offshore expenditure is a mixed-activities asset, subsection (9) applies as if the disposal value required to be brought into account as mentioned in subsection (8)(d) were such proportion of the actual disposal value as is just and reasonable having regard to that expenditure.

(11)The asset is a “mixed-activities asset” if it also represents expenditure on onshore oil-related activities which is incurred by the company in a pre-commencement period and in respect of which the company would, on the relevant assumption in section 329K, be entitled to an allowance under any provision of CAA 2001.

329MThe reference amount for a pre-commencement periodU.K.

For the purposes of section 329I, the reference amount for a pre-commencement period is the amount in the pool at the end of the period—

(a)after the addition to the pool of any qualifying pre-commencement onshore expenditure allocated to the pool for that period in accordance with section 329J(3), but

(b)before determining, and adding to the pool, the amount of any pre-commencement additional supplement claimed in respect of the period under this Chapter.]