Corporation Tax Act 2010 section 356HB

Introduction to sections 356HA and 356HB

Section 356HB sets out how to calculate the amount of onshore allowance that a company acquiring an equity interest in a licensed area is treated as generating at the relevant site, following a disposal of that equity interest by another company.

• When a company acquires an equity interest in a licensed area through a disposal, it is treated as generating onshore allowance at the relevant site from the start of its reference period or accounting period that begins with or because of that disposal.
• The amount of onshore allowance generated is calculated using the formula: R × E3 ÷ (E1 − E2), where R is the amount determined for the transferor's deduction under section 356HA.
• E3 represents the share of equity in the licensed area that the acquiring company has obtained from the disposing company, while E1 and E2 carry the same meanings as in section 356HA.
• The effect is that unactivated onshore allowance is redistributed from the transferor to the transferee in proportion to the equity interest transferred, ensuring the total allowance relating to the site is preserved across both parties.