PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES
C1CHAPTER V
C2 PETROLEUM EXTRACTION ACTIVITIES
Pt. 12 Ch. 5 applied (29.4.1996) by Finance Act 1996 (c. 8), Sch. 8 para. 1(4)
492 Treatment of oil extraction activities etc. for tax purposes.
(1) Where a person carries on as part of a trade—
those activities shall be treated F5for the purposes of the charge of corporation tax on income as a separate trade, distinct from all other activities carried on by him as part of the trade.
2
Relief in respect of a loss incurred by a person shall not be given under section 380 or 381 against income arising from oil extraction activities or from oil rights (“ring fence income”) except to the extent that the loss arises from such activities or rights.
3
Relief in respect of a loss incurred by a person shall not be given under section F1393A(1) against his ring fence profits except to the extent that the loss arises from oil extraction activities or from oil rights.
4
In any case where—
a
in any chargeable period a person incurs a loss in activities (“separate activities”) which, for that or any subsequent chargeable period, are treated by virtue of F6section 16(1) of ITTOIA 2005 or subsection (1) above as a separate trade for F7income tax purposes or (as the case may be) for the purposes of the charge of corporation tax on income; and
b
in any subsequent chargeable period any of his trading income is derived from activities (“related activities”) which are not part of the separate activities but which, apart from F8section 16(1) of ITTOIA 2005 or subsection (1) above, would together with those activities constitute a single trade,
then, notwithstanding anything in that F9section or subsection, the amount of the loss may be set off, in accordance with section 385 or 393(1), against so much of his trading income in any subsequent chargeable period as is derived from the related activities.
5
Subject to subsection (7) below, a capital allowance which is to be given to any person by discharge or repayment of tax shall not to any extent be given effect under F2section 258 of the Capital Allowances Act by deduction from or set off against his ring fence income.
6
Subject to subsection (7) below, a capital allowance which is to be given to any person by discharge or repayment of tax shall not to any extent be given effect under F3section 259 or 260 of the Capital Allowances Act by deduction from or set off against his ring fence profits.
7
Subsection (5) or (6) above shall not apply to a capital allowance which falls to be made to a company for any accounting period in respect of an asset used in the relevant accounting period by a company associated with it and so used in carrying on oil extraction activities. For the purposes of this subsection, the relevant accounting period is that in which the allowance in question first falls to be made to the company (whether or not it can to any extent be given effect in that period under F4section 259 of the Capital Allowances Act.
8
On a claim for group relief made by a claimant company in relation to a surrendering company, group relief shall not be allowed against the claimant company’s ring fence profits except to the extent that the claim relates to losses incurred by the surrendering company that arose from oil extraction activities or from oil rights.
Pt. 12 Ch. 5 modified (27.7.1999) by Finance Act 1999 (c. 16), s. 98