Corporation Tax Act 2010 section 356JC

Overview

Section 356JC provides an overview of the cluster area allowance regime, which gives tax relief for certain investment expenditure connected to cluster areas by reducing a company's adjusted ring fence profits for supplementary charge purposes.

• Companies incurring qualifying investment expenditure in a cluster area can generate an allowance that reduces their adjusted ring fence profits, thereby lowering the supplementary charge on oil and gas activities.
• The allowance must first be generated through relievable investment expenditure and then activated by relevant income from the same cluster area before it can be used to reduce profits.
• Special rules apply where a company's equity share in a licensed area changes during an accounting period, requiring the period to be split into reference periods, and allowances can be transferred when equity shares are disposed of.
• Where expenditure relates to an unlicensed part of a cluster area, a company can elect to treat the resulting allowance as if it were attributable to a licensed area or sub-area within that cluster area.