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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Capital allowances: extended ring fence expenditure supplement for onshore activities - post-commencement pools - reductions in respect of utilised onshore ring fence losses


If losses incurred by a qualifying company in its ring fence trade in a post-commencement period are used under section 45 (carry forward of trade loss against subsequent trade profits) to reduce any profits of a post-commencement period then the amount in the onshore ring fence pool is to be reduced accordingly in the period in which the losses are used.

For the purposes of the above paragraph it is assumed that losses accruing prior to 5 December 2013 are to be used under S45 in priority to losses accruing after that date.

If the losses relate to a mixture of onshore and offshore oil-related activities then the offshore losses are to be deemed as used under S45 in priority to onshore losses. This deeming is achieved by S329(R)(4) the relevant offshore loss.

In the case of a straddling period the relevant offshore loss is calculated by first apportioning the loss, normally on a time basis, unless felt by the company to work unjustly or unreasonably, with the appropriate proportion of the loss falling on or after 5 December 2013 forming the basis for the calculation under S329R(4).