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HMRC internal manual

Oil Taxation Manual

Capital allowances: ring fence expenditure supplement: post-commencement pools - reductions in respect of utilised ring fence losses


Where brought-forward ring fence losses are set against ring fence profits of a post-commencement period under CTA2010\S45 then the amount in the non-qualifying pool (see OT26170) is reduced by the amount of losses used CTA2010\S327(1).

If the losses exceed that amount then the non-qualifying pool is extinguished and the ring fence pool is reduced by amount of the losses in excess of those in the non-qualifying pool.

If the company does not have a non-qualifying pool then the ring fence pool is reduced by the amount of the utilised losses.

The amounts in the two pools are reduced first by reference to the amounts of losses that have been utilised against ring fence profits in the period. If any amounts remain in the pools after this reduction, then they may be reduced further if there are unrelieved group ring fence profits of the period (see OT26125).

Losses utilised in an accounting period that straddles 1 January 2006

There is a special rule to determine the amount by which the pools are reduced where ring fence losses are utilised against profits of an accounting period that straddles 1 January 2006, (CTA2010\S327(4)).

In this case, the post-commencement period for which the RFES claim is made will be the ‘deemed accounting period’ that begins on 1 January 2006 and ends on the company’s first accounting date after 1 January 2006.

The profits of the straddling period are apportioned to the deemed accounting period by reference to the number of days in the two periods. The amount so apportioned is then taken as the amount to use in reducing amounts in the post-commencement pools.