Corporation Tax Act 2010 section 330A

Decommissioning expenditure taken into account in calculating ring fence profits

Section 330A requires an add-back to adjusted ring fence profits where decommissioning expenditure has reduced those profits, ensuring that such expenditure does not receive relief at the full supplementary charge rate when that rate exceeds 20%.

• Where decommissioning expenditure reduces adjusted ring fence profits that would otherwise be positive, a fraction of the "used-up amount" of that expenditure must be added back to the profits subject to the supplementary charge
• The fraction added back is calculated as (SC − 20%) ÷ SC, where SC is the supplementary charge rate — effectively limiting the relief for decommissioning costs to 20% rather than the full SC rate
• When determining how much of any losses relates to decommissioning expenditure, other expenditure is assumed to be used first, though companies may elect to disapply this ordering if it produces an unfavourable result
• The section does not apply for any accounting period in which the supplementary charge rate is 20% or less, including any period that straddles 24 March 2011