Income Tax Act 2007 section 87

Ring fence trades

Section 87 deals with how losses from oil-related activities that are "ring fenced" as a separate trade can be carried forward and set against profits from other activities that would otherwise have formed part of the same trade.

• Where a person makes a loss from oil-related activities that are treated as a separate trade under the ring-fencing rules, this section allows the loss to be relieved more broadly.
• The section applies when the person also earns profits in a later tax year from other activities that would, but for the ring-fencing rules, have been part of the same single trade as the oil-related activities.
• For the purposes of carry-forward trade loss relief, the person may treat those other profits as if they were profits of the ring-fenced oil trade, allowing the oil-related loss to be set against them.
• This ensures that the ring-fencing of oil-related activities into a separate trade does not permanently prevent losses from being relieved against profits of what would naturally be the same overall trade.