Corporation Tax Act 2010 section 287

Restriction on credits to be brought into account

Section 287 prevents exchange gains on loan relationships from inflating a company's ring fence profits, unless the underlying borrowing was used to finance oil extraction activities.

• Exchange gain credits on loan relationships cannot increase a company's ring fence profits unless the borrowed money was used (or earmarked) for oil extraction expenditure or acquiring oil rights from unconnected parties.
• The restriction also does not apply to abortive loan relationships (under section 329 of CTA 2009) where the intended borrowing would have financed ring fence activities, or to relevant non-lending relationships where interest payments or the underlying money debt relate to oil extraction expenditure.
• Any exchange gain credit that is blocked from increasing ring fence profits must instead be treated as a non-trading credit, ensuring it is still recognised in the company's overall corporation tax computation.
• The definitions and interpretive rules in section 286(6) also apply for the purposes of this section.