Corporation Tax Act 2010 section 944E

Modified application of section 303D

Section 944E deals with the transfer of a ring fence trade (i.e. UK oil and gas extraction activities) and ensures that unused carried-forward losses from the predecessor company can pass to the successor company, subject to certain conditions.

• When a ring fence trade is transferred and the predecessor had losses carried forward into its final trading period that remained unused, those losses can be passed to the successor company.
• Losses only transfer to the extent they were not deducted from the predecessor's ring fence profits or total profits in the cessation period, and were not surrendered as group relief for carried-forward losses.
• The successor company steps into the predecessor's shoes: the transferred losses are treated as carried forward into the successor's first accounting period of the transferred trade, and the normal carry-forward rules then apply to the successor.
• A "ring fence trade" is a trade involving oil extraction activities or oil rights in the UK and UK continental shelf, as defined in Part 8 of the Corporation Tax Act 2010.