Corporation Tax Act 2010 section 674A

Section 674: exception for certain losses of ring fence trade

Section 674A provides an exception to the normal rule that disallows trading losses following a change in company ownership, specifically for certain losses arising in oil and gas ring fence trades.

• Losses made in a ring fence trade (oil and gas extraction activities) may still qualify for relief even after a change in company ownership, provided certain conditions are met
• The loss must not be a non-decommissioning loss — broadly, it must relate to decommissioning expenditure rather than ordinary trading activity
• The disallowance rule being disapplied must be the one triggered by a major change in the nature or conduct of the trade (condition A), rather than by the trade becoming small or negligible
• The major change in the nature or conduct of the trade must not have occurred within the 3-year period surrounding the change in ownership