What does section 18 of the Energy (Oil and Gas) Profits Levy Act 2022 do?

Section 18 extends the existing corporation tax rules on changes in company ownership found in Part 14 of CTA 2010 to the Energy Profits Levy. This ensures that when an oil and gas company changes hands, the same restrictions that apply to ordinary corporation tax reliefs also apply to accumulated levy reliefs, preventing the trading of losses.

Can accumulated Energy Profits Levy reliefs be used after a change of company ownership?

Not without restriction. If a company undergoes a change of ownership, the rules in Part 14 of CTA 2010 as applied by section 18 may restrict or deny the use of accumulated levy reliefs, particularly where there is a major change in the nature or conduct of the company's trade within a specified period around the ownership change.

Why were ownership change rules extended to the Energy Profits Levy?

The rules were extended to prevent the practice of acquiring oil and gas companies primarily to exploit their accumulated Energy Profits Levy reliefs, such as carried-forward losses. This mirrors the longstanding corporation tax policy of preventing loss trading and ensures consistent treatment across both the levy and regular corporation tax.

How do the ownership change rules apply in practice when acquiring an oil and gas company?

When acquiring an oil and gas company with accumulated levy reliefs, advisers must assess whether the change of ownership rules will restrict those reliefs going forward. If a major change in the nature or conduct of the trade occurs around the ownership change, reliefs may be restricted, mirroring the treatment for equivalent corporation tax reliefs.

Energy (Oil and Gas) Profits Levy Act 2022 section 18

Change in company ownership

Section 18 applies the existing corporation tax rules on changes in company ownership to reliefs available under the Energy Profits Levy.

The standard corporation tax rules dealing with changes in company ownership (Part 14 of CTA 2010) are extended to the Energy Profits Levy.
These rules restrict the ability of a company to use certain tax reliefs after a change of ownership, preventing the trading of losses and other reliefs.
The rules apply with any necessary modifications to ensure they work properly in the context of the levy.
Each relief under the levy is matched to its corresponding corporation tax relief, so the same ownership-change restrictions apply to both.

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member