OT21057 - CORPORATION TAX RING FENCE: LOSSES AND GROUP RELIEF: LOSSES CARRIED FORWARD: RESTRICTED RELIEF CTA10/S304(7) The loss reform rules restrict the amount of certain carried forward

losses that can be deducted from a company’s trading profits and its total profits, to the appropriate share of its deduction allowance (CTM05120) plus 50% of the remaining profits. In

general, ring fence profits and losses are carved out of the restriction. As a result, most losses of a ring fence trade, whether they are decommissioning or non-decommissioning losses, can

continue to be carried forward and set against subsequent profits of the ring fence trade, without restriction. The exception to this is when a non-decommissioning loss is deducted from: *

companies were able to set a loss incurred in a ring fence trade against profits from ‘related activities’. Related activities are those activities which would have been considered as being

part of the same trade as the oil-related activities, were it not for the operation of CTA10/S279, which treats oil-related activities as a separate trade. This treatment remains available

for post1 April 2017 losses, both decommissioning and non-decommissioning. Where the ring fence loss is a decommissioning loss carried forward under CTA10/S45B and is set against profits

from non-ring fence ‘related activities’, the amount of the loss that can be set against those related activities is not subject to the restriction. However, where a non-decommissioning loss

is set against non-ring fence ‘related activities’, the 50% restriction applies. Companies will need to determine the share of their group deductions allowance that is allocated to their

(non-ring fence) trading profits for the period, to allow them to calculate the amount of loss that can be set off (CTM05120). Previous page Next page Print this page