Corporation Tax Act 2010 section 286

Restriction on debits to be brought into account

Section 286 restricts the use of loan relationship debits against a company's ring fence profits, while preserving relief for borrowings genuinely connected with oil extraction activities.

• Non-trading loan relationship debits cannot generally be set against a company's ring fence profits
• The restriction does not apply where borrowed money has been used, or earmarked, to fund oil extraction activities or to acquire oil rights from unconnected parties
• The restriction also does not apply to certain debits arising from abortive loan arrangements or from relevant non-lending relationships, provided they relate to oil extraction expenditure
• Where a debit is blocked from reducing ring fence profits, it is treated as a non-trading debit and may instead be relieved against other, non-ring-fence profits