Corporation Tax Act 2010 section 356NC

Restriction on credits to be brought into account

Section 356NC restricts exchange gains arising from a contractor's loan relationships from being included in the contractor's ring fence profits, unless the borrowing is connected to oil contractor activities.

• Exchange gain credits from a contractor's loan relationships cannot be brought into account in a way that increases the contractor's ring fence profits, unless the borrowed money was used (or earmarked) for oil contractor activities.
• The restriction does not apply to pre-loan or abortive expense credits where the intended loan would have been for borrowing money to fund oil contractor activities.
• The restriction also does not apply to certain non-lending relationships where the interest payments constitute oil contractor expenditure, or where the exchange gain relates to a debt whose interest would be such expenditure.
• Any credit that is blocked from increasing ring fence profits must instead be treated as a non-trading credit, regardless of how it would normally be classified.