Capital Allowances: Exploration Expenditure Supplement: Post-commencement EES - Using the pools
ICTA88\Sch19B\para 19, ICTA88\Sch19B\para 20 & ICTA88\Sch19B\para 21
The EES pools work in the following way.
- The qualifying pool consists of the company’s qualifying E&A losses of a period, plus qualifying E&A losses from earlier periods and any post-commencement EES claimed in respect of those losses.
- The non-qualifying pool consists of the company’s other ring fences losses that are not qualifying E&A losses.
- The balances in the qualifying and non-qualifying pools of a post-commencement period may be reduced if loss relief is given under ICTA88\S393, or if there are unrelieved group ring fence profits.
- If brought-forward ring fence losses are set against ring fence profits under ICTA88\S393, those losses are first set against the amount in the non-qualifying pool. If the losses exceed that amount, the difference reduces the amount in the qualifying pool.
- Then, if there are unrelieved group ring fence profits for the period, the amount of those profits is first set against the amount remaining (if any) in the non-qualifying pool. If the unrelieved group ring fence profits exceed that amount, the difference reduces the amount remaining (if any) in the qualifying pool.
- EES may then be claimed at a rate of 6% of the balance in the qualifying pool (reduced if the period is less than 12 months but see OT26088 if the claim is for a deemed accounting period ending on 31 December 2005), and added to the qualifying pool. The balance is carried forwards to the next period.