Corporation Tax Act 2010

Change in equity share: activation of allowance U.K.

342 Introduction to sections 343 and 344 U.K.

(1) Sections 343 and 344 apply to a company in respect of [F2 an eligible oil field] and an accounting period if the following conditions are met.

(2) Condition A is that the company is a licensee in the field for the whole, or for part, of the accounting period.

(3) Condition B is that the company's share of the equity in the field is different at different times during the accounting period.

(4) Condition C is that the company holds an unactivated amount of field allowance for the field at any time during the accounting period.

(5) Condition D is that the company has relevant income from the field in the accounting period.

[F3 (5A) But in a case where the field is an additionally-developed oil field in relation to which a qualifying project has been authorised as mentioned in section 349A(1)(a), the company is to be treated as having relevant income from the field in the accounting period if, and only if—

(a) a substantial amount of work has been done in relation to the project, and

(b) the accounting period begins on or after the first day of the year of expected first production for the field.

(5B) For the purposes of subsection (5A)—

(a) “the year of expected first production” for the field is the year that was notified to the national authority, on or before the day on which the project was authorised, as the calendar year in which additional reserves of oil were expected to be first won from the field as a result of the project, and

(b) “qualifying project” means a project meeting the conditions in subsection (1)(aa) and (b) of section 349A.]

(6) In a case where a company has three or more different shares of the equity in [F4 an eligible oil field] during a particular day, sections 343 and 344 (in particular provisions relating to the beginning or end of a day) have effect subject to the necessary modifications.

Textual Amendments

F2 Words in s. 342(1) substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 8, 21(2); S.I. 2013/744, art. 2

F3 S. 342(5A)(5B) inserted (retrospective to 1.4.2013) by The Additionally-developed Oil Fields Order 2013 (S.I. 2013/2910), arts. 1(1), 7

F4 Words in s. 342(6) substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 8, 21(2); S.I. 2013/744, art. 2

343 Reference periods U.K.

(1) For the purposes of section 344, the accounting period, or (if the company is not a licensee for the whole of the accounting period) the part or parts of the accounting period for which the company is a licensee, is to be divided into reference periods.

(2) A reference period is a period of consecutive days that meets the following conditions.

(3) Condition A is that, at the beginning of each day in the period, the company is a licensee in [F5 the eligible oil field ].

(4) Condition B is that, at the beginning of each day in the period, the company's share of the equity in the field is the same.

(5) Condition C is that, at the beginning of the first day of the period, the company holds an unactivated amount of field allowance for the field.

(6) Condition D is that each day in the period falls within the accounting period.

Textual Amendments

F5 Words in s. 343(3) substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 9, 21(2); S.I. 2013/744, art. 2

344 Activation of field allowance U.K.

(1) An amount of the company's field allowance for [F6 the eligible oil field] is to be activated in respect of each reference period.

(2) The amount of the field allowance to be activated is the smallest of the following amounts—

(a) the relevant activation limit,

(b) the company's relevant income from the field in the reference period, and

(c) the unactivated amount of the field allowance which the company holds at the beginning of the reference period.

(3) The relevant activation limit is—

where—

T is the amount of the total field allowance for the field (see [F7 sections 356 and 356A]),

E is the company's share of the equity in the field during the reference period, and

R is the number of days in the reference period.

(4) The company's relevant income from the field in the reference period is—

where—

I is the company's relevant income from the field in the whole of the accounting period,

R is the number of days in the reference period, and

L is the number of days in the accounting period for which the company is a licensee in [F8 the field].

[F9 (5) Subsection (6) applies for the purpose of determining the amount of a company's field allowance for an eligible oil field (“the relevant field allowance”) to be activated in a case where—

(a) the company holds one or more other field allowances for the field, and

(b) at the time when the company began to hold the relevant field allowance, the company already held one or more of those other field allowances (an “earlier field allowance”).

(6) The amount of the company's relevant income from the field in the reference period is to be reduced (but not to below nil) by the amount of any earlier field allowance activated in respect of the reference period.

(7) In a case where the company began to hold two or more field allowances at the same time, the company may determine the order in which the company is to be regarded for the purposes of this section as having begun to hold them.]

Textual Amendments

F6 Words in s. 344(1) substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 10(2), 21(2); S.I. 2013/744, art. 2

F7 Words in s. 344(3) substituted (retrospective to 1.4.2013) by The Additionally-developed Oil Fields Order 2013 (S.I. 2013/2910), arts. 1(1), 8

F8 Words in s. 344(4) substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 10(3), 21(2); S.I. 2013/744, art. 2

F9 S. 344(5)-(7) inserted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 10(4), 21(2); S.I. 2013/744, art. 2