Corporation Tax Act 2010 section 312

Qualifying pre-commencement expenditure

Section 312 defines what counts as qualifying pre-commencement expenditure for companies preparing to carry on a ring fence trade in oil extraction.

• Expenditure must be incurred on or after 1 January 2006, in the course of oil extraction activities, by a company intending to carry on a ring fence trade but before that trade has commenced.
• The expenditure must either be allowable as a deduction in calculating profits for the commencement period of the ring fence trade, or qualify as relevant R&D expenditure incurred by an SME.
• Relevant R&D expenditure by an SME means the company has elected to treat pre-trading expenditure as a deemed trading loss but has not claimed an R&D tax credit in respect of that same expenditure.
• Where qualifying pre-commencement expenditure is relevant R&D expenditure incurred by an SME, it is treated as being equal to 150% of its actual amount for the purposes of this chapter.