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HMRC internal manual

Oil Taxation Manual

Capital allowances: extended ring fence expenditure supplement for onshore activities - the onshore ring fence pool


For the purpose of determining the amount of any post-commencement ERFES a qualifying company is to be taken at all times in its post-commencement periods to have a continuing mixed pool (the onshore ring fence pool) even if the amount in it is nil. This consists of:

  • the company’s onshore ring fence losses,
  • the post-commencement supplement under Chapter 5 attributable to onshore oil-related activities,
  • the post-commencement additional supplement under Chapter 5A.

Where the company has carried on a ring fence trade consisting of both onshore and offshore oil-related activities then the post commencement supplement (under either Chapter 5 or Chapter 5A) that can be attributed directly or indirectly to the company’s onshore oil-related activities is to be calculated on a just and reasonable basis.

In the case of a straddling period the company’s post commencement supplement is calculated by apportioning, normally on a time basis, unless felt by the company to work unjustly or unreasonably, with the appropriate proportion of the post commencement supplement falling on or after 5 December 2013 being added to the pool.

Any reduction in any accounting period in the amount in the onshore ring fence pool is to be made after the allocation of any onshore ring fence losses and post-commencement supplement under Chapter 5, but before the addition of post-commencement additional supplement under Chapter 5A.