Corporation Tax Act 2010 section 356NH

Restriction on deductions from contractor's ring fence profits

Section 356NH limits the amount of carried-forward losses and group relief for carried-forward losses that an oil contractor can deduct from its ring fence profits in any accounting period.

• Certain carried-forward trade losses and group relief amounts set against a contractor's ring fence profits are classified as "relevant deductions" and are subject to a cap
• The cap (known as the relevant Part 8ZA maximum) is calculated as 50% of the contractor's ring fence profits for the period, plus the contractor's ring fence profits deductions allowance for that period
• Relevant deductions include pre-April 2017 losses from oil contractor activities carried forward under section 45(4)(b), post-April 2017 trade losses carried forward under section 45A, and group relief for carried-forward losses under Part 5A
• Losses under section 45A and Part 5A only count as relevant deductions to the extent they are specifically set against ring fence profits