Corporation Tax Act 2010 section 356JH

Activation of allowance: no change of equity share

Section 356JH explains how a company's cluster area allowance is activated where there has been no change in equity share during the accounting period, by comparing unactivated allowance against relevant income.

• Where a company is a licensee in a cluster area, holds a closing balance of unactivated allowance greater than zero, and has relevant income from that cluster area, it may activate some or all of that allowance
• The amount of activated allowance is the lower of the closing balance of unactivated allowance and the total relevant income from the cluster area for the accounting period
• Relevant income means production income from oil extraction activities in the cluster area, plus any other income categories prescribed by Treasury regulations, including tariff receipts — but tariff receipts must be apportioned on a just and reasonable basis if they only partly relate to the cluster area
• Anti-avoidance rules deny tariff receipt treatment to income arising from arrangements whose main purpose is to bring income within the relevant income definition or to accelerate the timing of such income