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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Corporation tax general: world-wide activities

There is a strong presumption that a company carrying on a business of exploring for and producing oil in various parts of the world is carrying on one trade. It is exceptional for this not to be so, but the presumption might be rebutted by highly unusual facts. In deciding whether activities outside the UK amount to the carrying on of a trade, the same criteria apply as in the case of UK interests. Care should be taken to distinguish between investment in a project (in particular in the US or Canada) and trading. Where a company has a petroliferous trade overseas, UK exploration within the ring fence (RF - see OT21000) is part of that trade and therefore relief for UK exploration expenditure can be given as Ring Fence losses.