Corporation Tax Act 2010 section 316

The mixed pool of qualifying pre-commencement expenditure and supplement previously allowed

Section 316 explains how a qualifying oil company builds up its mixed pool of expenditure and supplement for the purposes of calculating pre-commencement ring fence expenditure supplement.

• A qualifying company is treated as having maintained a continuous mixed pool throughout all its pre-commencement periods, comprising any amount carried forward from the old exploration expenditure supplement regime, qualifying pre-commencement expenditure, and any pre-commencement supplement previously allowed.
• Qualifying pre-commencement expenditure is allocated to the pool for each pre-commencement period using a four-step process: first, identify the eligible expenditure incurred in the period; second, total it up (amount E); third, reduce amount E for any disposal receipts; fourth, reduce it further for any unrelieved group ring fence profits. The remaining balance of amount E is then added to the pool for that period.
• Any pre-commencement supplement that has been claimed and allowed for a pre-commencement period is also added to the pool for that period, increasing the base on which future supplement may be calculated.
• The pool is subject to an adjustment under section 318A, which can remove expenditure incurred before 2013 once the initial six accounting periods have elapsed.