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HMRC internal manual

Oil Taxation Manual

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HM Revenue & Customs
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Capital allowances: ring fence expenditure supplement: accounting periods

CTA2010\S309

The company’s accounting periods for the purposes of the RFES are defined as follows.

The ‘commencement period’ is the accounting period in which the company sets up and commences its ring fence trade.

A ‘post-commencement period’ is any accounting period beginning on or after 1 January 2006

  1. which is the commencement period, or
  2. which ends after the commencement period.

A ‘pre-commencement period’ is any accounting period

  1. beginning on or after 1 January 2006, and
  2. ending before the commencement period.

Exceptionally, a company may start to carry out activities before it has an accounting period for tax purposes (CTA2009\S9). If a company incurs any expenditure but is not within the charge to corporation tax, it is treated for RFES purposes as if those activities were carried on in a trade. The company is then treated as having accounting periods commencing from the date on which that deemed trade started.

A ‘straddling period’ of a qualifying company is an accounting period that begins before 1 January 2006 and ends on or after that date. The part of the straddling period that falls before 1 January 2006 and the part that falls after that date are treated as separate accounting periods for RFES purposes.