This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Oil Taxation Manual

Transferable tax history - Effect of a TTH election on the seller - Remaining Adjusted ring fence profits

Where the full amount of adjusted ring fence profits of an AP are not transferred, because the AP in question is the earliest AP subject to the TTH election, the remaining proportion of the adjusted ring fence profits is to be treated as if it contains the corresponding proportion of finance costs and any allowances made under Part 8 CTA 2010 (Investment allowance, Onshore allowance and Cluster area allowance).


Seller company (S), in AP 1, had ring fence profits of £20m, after deducting £4m finance costs. It adjusted ring fence profits were therefore £24m, but were reduced to £18m as it had £6m of activated investment allowance.

S transferred £5m ring fence profits in a TTH election. This is 25% of its total ring fence profits. Correspondingly, 25% of its final taxable adjusted ring fence profits must also be transferred – this is £4.5m (25% of 18m).

S continues to be treated as having made, and paid the tax on, £15m ring fence profits, and £13.5m adjusted ring fence profits.

For the purposes of calculating finance costs and investment allowance in the future where a loss is carried back to that AP 1, the £13.5m adjusted ring fence profits are treated as having been calculated as follows:

£15m ring fence profits plus £3m finance costs minus £4.5m investment allowance = £13.5m adjusted ring fence profits.

Only £4.5m investment allowance can be displaced if a loss is subsequently carried back to AP1.