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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Corporation Tax Ring Fence: Losses and Group Relief: Overview of Loss Relief


CTA10\S37 (augmented by S39, S40, S41 & S44, formerly ICTA88\S393A) allow a company incurring a loss in a trade to set that loss against profits of the same AP of loss and of earlier APs during which the trade was being carried on.

In general, a loss may be carried back to be set against profits of the previous year. Longer carry back periods apply when the loss arises

  • from allowances for abandonment expenditure or for general decommissioning expenditure, or
  • in the last twelve months of the company’s trade.

Losses arising from general decommissioning expenditure or abandonment relief can be carried back and set against all profits of earlier APs, for a period of three years (CTA10\S40) - see OT21060 and OT28020).

For APs beginning on or after 12 March 2008, the carry back period for relief for general decommissioning losses and terminal losses was extended. These losses can now be carried back and set against ring fence profits of previous AP’s back to 17 April 2002 (CTA10\S42 - see OT21065 and OT28000).

Non-ring fence losses

Where a company carrying on a petroliferous trade incurs a non-ring fence loss, CTA10\S304(1) provides that that loss cannot be allowed against ring fence profits for purposes of CTA10\S37.

Ring fence losses

There is no such restriction on ring fence losses which can, as with other losses, be carried back and allowed generally against profits including non-ring fence ones.