Energy (Oil and Gas) Profits Levy Act 2022 Schedule 1 paragraphs 1–4

Carry back of qualifying levy losses to earlier qualifying accounting periods

Schedule 1 paragraphs 1 to 4 set out the rules for carrying back qualifying levy losses to offset them against qualifying levy profits of earlier periods, including extended carry-back where a company ceases its ring fence trade.

• A company with a qualifying levy loss from a ring fence trade may claim to carry that loss back and deduct it from qualifying levy profits of previous qualifying accounting periods falling within the 12 months immediately before the loss-making period begins.
• The claim must be made within two years of the end of the loss-making period (or a longer period if HMRC allows), and where losses arise in different periods, they are deducted in chronological order starting with the earliest.
• Relief is only available if the ring fence trade is carried on commercially with a view to making a profit; where an accounting period only partly falls within the 12-month window, the deductible amount is limited to a time-apportioned share of that period's qualifying levy profits.
• Where a company ceases its ring fence trade and has a terminal qualifying levy loss, the 12-month carry-back window is extended to three years — but this extended relief is denied if the cessation is connected with arrangements whose main purpose is to exploit the terminal loss provisions and the trade activities pass to a person not chargeable to the levy.