Corporation Tax Act 2010 section 42

Ring fence trades: further extension of period for relief

Section 42 provides an additional carry-back period for unrelieved losses from oil and gas ring fence trades, allowing losses to be set against ring fence profits of periods earlier than the standard three-year carry-back window, back to accounting periods ending on or after 17 April 2002.

• Where a company has claimed loss relief for a ring fence trade under the extended three-year carry-back rules but insufficient profits exist in that period, the unrelieved portion of the loss can be carried back further against ring fence trade profits of earlier accounting periods ending on or after 17 April 2002.
• The further carry-back is applied to the latest available earlier period first, working backwards, and where an accounting period straddles either the start of the three-year relief period or the 17 April 2002 cut-off date, the relief is proportionally reduced to reflect only the part of the period that falls outside those boundaries.
• Where losses from more than one accounting period qualify for this further carry-back into the same earlier period, the earliest loss must be relieved first.
• This provision is primarily intended to ensure that companies incurring decommissioning expenditure on oil and gas infrastructure can obtain full relief for the resulting losses, even where those losses exceed the profits available within the normal and extended carry-back periods.