Corporation Tax Act 2010 section 356NI

Deductions allowances where company has contractor's ring fence profits

Section 356NI sets out how to split a company's deductions allowance between its general activities and its oil contractor ring fence profits, and how relevant reversal credits affect that calculation.

• Where a company has contractor's ring fence profits, it must divide its overall deductions allowance (calculated under Part 7ZA) between those ring fence profits and its other activities.
• The company can specify in its tax return how much of its total deductions allowance it wishes to allocate as its contractor's ring fence profits deductions allowance; if it specifies nothing, that allowance is nil.
• If a relevant reversal credit is brought into account in calculating the contractor's ring fence profits, the ring fence profits deductions allowance is increased by the reversal credit amount, or by the ring fence profits themselves if that figure is lower.
• The company's remaining deductions allowance for general Part 7ZA purposes equals the total deductions allowance (amount A) minus whatever has been allocated to the contractor's ring fence profits deductions allowance.