Corporation Tax Ring Fence: Oil Extraction as a Separate Trade
CTA10\S279 & ITTOIA05\S16 provide that certain extraction activities conducted as part of a trade are to be treated for all purposes of income and corporation tax as “a separate trade, distinct from all other activities carried on … as part of the trade”. The activities are
- any oil extraction activities or
- the acquisition, enjoyment or exploitation of oil rights or
- activities of both descriptions.
Where one composite trade is formed partly of ring fence elements and partly of non-ring fence elements the ring fence and non-ring fence profits must be calculated separately.