(9) In section 371KJ—

(a) in subsection (2)(a), the reference to intellectual property held by the CFC is to be read as a reference to intellectual property held by company X (ignoring the assumption in section 18I (3)(a) above), and

(b) in subsections (2)(b) and (c) and (4), references to the CFC are to be read as references to company X (ignoring that assumption).

18IB The low profits exemption

Chapter 12 of Part 9A of TIOPA 2010 (controlled foreign companies: the low profits exemption) applies for the purposes of section 18G (1)(c) with the omission of section 371LB (2) and (4) and section 371LC (5) and (6).

18IC The low profit margin exemption

(1) Chapter 13 of Part 9A of TIOPA 2010 (controlled foreign companies: the low profit margin exemption) applies for the purposes of section 18G (1)(c) with the following modifications.

(2) In section 371MB—

(a) subsection (2) is to be omitted, and

(b) references to the CFC’s accounting profits for an accounting period are to be read as references to the adjusted relevant profits amount determined before any deduction for interest.

18ID The tax exemption

(1) Chapter 14 of Part 9A of TIOPA 2010 (controlled foreign companies: the tax exemption) applies for the purposes of section 18G (1)(c) with the following modifications.

(2) At step 1 in section 371NB (1)—

(a) in the first paragraph, the reference to section 371TB of TIOPA 2010 is to be read as a reference to the assumption in section 18I (3)(b) above relating to the CFC’s residence, and

(b) the second paragraph is to be omitted.

(3) References to the CFC’s local chargeable profits arising in the accounting period are to be read as references to the adjusted relevant profits amount and, accordingly, sections 371NB (4) and 371NC (2) to (4) are to be omitted.

(4) In sections 371NC (5)(b) and 371NE (3) the reference to the CFC is to be read as a reference to company X (ignoring the assumption in section 18I (3)(a) above).”

7 After section 18P(2) insert—

“(3) Subsection (2) does not apply in relation to—

(a) a chargeable gain accruing on the disposal of an asset used, and used only, for the purposes of a trade so far as carried on by the company in the relevant foreign territory through the company’s permanent establishment there, or

(b) a chargeable gain accruing on the disposal of currency or of a debt within section 252(1) of TCGA 1992 where the currency or debt is or represents money in use for the purposes of a trade so far as carried on by the company in the relevant foreign territory through the company’s permanent establishment there.”

Lloyd’s underwriters

8 In Chapter 5 of Part 4 of FA 1994 (Lloyd’s underwriters) after section 227B insert—

“227C Exemption for profits or losses of foreign permanent establishments

(1) This section applies for the purposes of section 18A(6) and (7) of the Corporation Tax Act 2009 (exemption for profits or losses of foreign permanent establishments: “relevant profits amount” and “relevant losses amount”).

(2) Any regulations made under section 229(1)(d) below are to be ignored.

(3) Profits or losses which are taken to arise to a corporate member in an underwriting year from its membership of one or more syndicates are to be left out of account in relation to any relevant accounting period so far as they are profits or losses of a previous underwriting

year which began before the relevant day (as defined in section 18F of the 2009 Act (effect of election under section 18A)).

(4) Profits or losses arising to a corporate member from assets forming part of a premium trust fund which are taken to be profits or losses of an underwriting year are to be left out of account in relation to any relevant accounting period so far as they are allocated under the rules or practice of Lloyds to a previous underwriting year which began before the relevant day (as defined in section 18F of the 2009 Act).”

Plant and machinery allowances

9 In section 15 of CAA 2001 (plant and machinery allowances: qualifying activities) after subsection (2A) insert—

“(2B) Subsection (2A) does not apply to the business so far as it consists of a plant or machinery lease under which the company is a lessor if any profits or losses arising from the lease are to be left out of account as mentioned in section 18C(3) of CTA 2009.”

Part 3 Other amendments

TMA 1970

10 TMA 1970 is amended as follows.

11 In section 55 (recovery of tax not postponed) in subsection (1) omit paragraph (d).

12 In section 59E (provision about when corporation tax due and payable) in subsection (11) for paragraph (b) substitute—

“(b) to any sum charged on a company at step 5 in section 371BC (1) of TIOPA 2010 (controlled foreign companies) as if it were an amount of corporation tax;”.

13 In section 59F (arrangements for paying tax on behalf of group members) in subsection (6) for paragraph (b) and the “and” after it substitute—

“(b) a sum charged on a company at step 5 in section 371BC (1) of TIOPA 2010 (controlled foreign companies) as if it were an amount of corporation tax, and”.

ICTA

14 In ICTA omit Chapter 4 of Part 17 (controlled foreign companies).

FA 1998

15 FA 1998 is amended as follows.

16 In section 32 (unrelieved surplus advance corporation tax) for subsection (5) substitute—

“(5) The provision which may be made by regulations under this section includes provision for or in connection with enabling unrelieved

surplus advance corporation tax to be set against liability to a sum charged at step 5 in section 371BC (1) of the Taxation (International and Other Provisions) Act 2010 (controlled foreign companies) as if it were an amount of corporation tax for an accounting period.”

17 (1) Schedule 18 (company tax returns) is amended as follows.

(2) In paragraph 1 for “section 747(4)(a) of the Taxes Act 1988 (tax on profits of controlled foreign company)” substitute “step 5 in section 371BC (1) of the Taxation (International and Other Provisions) Act 2010 (controlled foreign companies)”.

(3) In paragraph 8(1), in the third step, for paragraph 2 substitute—

“2. Any sum charged at step 5 in section 371BC (1) of the Taxation (International and Other Provisions) Act 2010 (controlled foreign companies).”

FA 2000

18 Schedule 22 to FA 2000 (tonnage tax) is amended as follows.

19 (1) Paragraph 54 is amended as follows.

(2) In sub-paragraph (1)—

(a) for “under section 747 of the Taxes Act 1988” substitute “at step 5 in section 371BC (1) of the Taxation (International and Other Provisions) Act 2010 (“TIOPA 2010”)”,

(b) for “controlled foreign company” (in both places) substitute “CFC”, and

(c) at the end insert “; and, accordingly, the tonnage tax company is not to be a chargeable company for the purposes of Part 9A of TIOPA 2010 in relation to the CFC’s accounting period in question.”

(3) For sub-paragraphs (2) to (5) substitute—

“(2) In relation to a CFC which—

(a) is a member of a tonnage tax group, and

(b) is a tonnage tax company by virtue of the group’s tonnage tax election, or would be if it were within the charge to corporation tax,

the corporation tax assumptions within the meaning of Part 9A of TIOPA 2010 are to be taken to include the following assumption.

(3) The CFC is to be assumed to be a single company that is a tonnage tax company.

(4) Nothing in section 371SL (1) of TIOPA 2010 affects sub-paragraphs (2) and (3) above.

(5) In this paragraph “CFC” has the same meaning as in Part 9A of TIOPA 2010.”

20 (1) Paragraph 57 is amended as follows.

(2) In sub-paragraph (1)(b) for the words from “controlled” to the end substitute “CFC apportioned to the company at step 3 in section 371BC (1) of the Taxation (International and Other Provisions) Act 2010.”

(3) For sub-paragraph (4) substitute—

“(4) For the purposes of sub-paragraph (1)(b)—

(a) “tonnage profits” means so much of the CFC’s chargeable profits for its accounting period in question as, applying the corporation tax assumptions, are calculated in accordance with paragraph 4 of this Schedule; and

(b) so much of those chargeable profits as are tonnage profits shall be treated as apportioned at step 3 in section 371BC (1)of the Taxation (International and Other Provisions) Act 2010 in the same proportions as those profits (taken generally) are apportioned.

(4A) In sub-paragraphs (1)(b) and (4) terms defined in Part 9A of the Taxation (International and Other Provisions) Act 2010 have the same meaning as in that Part.”

FA 2002

21 In FA 2002 omit section 90 (controlled foreign companies and treaty non-resident companies).

ITA 2007

22 (1) Section 725 of ITA 2007 (transfer of assets abroad: reduction in amount charged where controlled foreign company involved) is amended as follows.

(2) For subsection (1) substitute—

“(1) This section applies if—

(a) under Part 9A of TIOPA 2010 (controlled foreign companies), the CFC charge is charged in relation to a CFC’s accounting period, and

(b) apart from this section, the amount of income treated as arising to an individual under section 721 for a tax year would be or include a sum forming part of the CFC’s chargeable profits for that accounting period.”

(3) In subsection (2)—

(a) for “controlled foreign company’s” (in both places) substitute “CFC’s”, and

(b) in the definition of “CA” for “chargeable amount” substitute “CFC’s chargeable profits for that accounting period so far as apportioned to chargeable companies at step 3 in section 371BC (1) of TIOPA 2010”.

(4) For subsection (3) substitute—

“(3) Terms used in this section which are defined in Part 9A of TIOPA 2010 have the same meaning as in that Part.”

FA 2007

23 (1) Paragraph 3 of Schedule 11 to FA 2007 (technical provision made by insurers) is amended as follows.

(2) In sub-paragraph (1) for paragraph (b) and the “or” after it substitute—

“(b) a CFC (within the meaning of Part 9A of the Taxation (International and Other Provisions) Act 2010) which carries on general business, or”.

(3) In sub-paragraph (2) for paragraph (b) substitute—

“(b) a company which for the purposes of Part 9A of the Taxation (International and Other Provisions) Act 2010 has an interest in a CFC (within the meaning of that Part) which carries on general business.”

CTA 2009

24 CTA 2009 is amended as follows.

25 In section A1 (overview of the Corporation Tax Acts) in subsection (2)—

(a) omit paragraph (b),

(b) omit the “and” after paragraph (i), and

(c) after paragraph (j) insert “, and

(k) Part 9A of that Act (controlled foreign companies).”

26 In section 486D (disguised interest: arrangement with no tax avoidance purpose) omit subsections (5) and (6).

27 (1) Section 486E (disguised interest: excluded shares) is amended as follows.

(2) In subsection (7)(c) for “relevant controlled foreign company” substitute “CFC within the meaning of Part 9A of TIOPA 2010”.

(3) For subsections (9) and (10) substitute—

“(9) For the purposes of subsection (7)(b) a company (“C”) is a relevant joint venture company if—

(a) the holding company is one of two persons who, taken together, control C,

(b) the holding company has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C, and

(c) the second person has interests, rights and powers representing—

(i) at least 40%, but

(ii) no more than 55%,

of the holdings, rights and powers in respect of which the holding company and the second person fall to be taken as controlling C.

(10) For the purposes of subsection (9)—

(a) section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purpose of determining if two persons, taken together, control a company, and

(b) section 371RD of that Act applies for the purpose of determining if the requirements of paragraphs (b) and (c) are met in any case.”

(4) Omit subsection (11).

28 In section 521E (unallowable purpose) omit subsections (5) and (6).

29 Omit section 870 (intangible fixed assets: assumptions to be made in the case of a controlled foreign company) and the cross-heading before it.

30 In Chapter 2 of Part 9A (exemption of distributions received by small companies) after section 931C insert—

“931CA Further exemption where distribution received from CFC

(1) Subsection (2) applies if—

(a) under Part 9A of TIOPA 2010 (controlled foreign companies), the CFC charge is charged in relation to a CFC’s accounting period,

(b) a dividend or other distribution of the CFC is received in an accounting period (for corporation tax purposes) of the recipient in which the recipient is a small company,

(c) the whole or a part of the distribution is paid in respect of profits which are chargeable profits of the CFC for its accounting period mentioned in paragraph (a), and

(d) the requirements of section 931B(b) to (d) are met in relation to the distribution.

(2) The distribution is exempt.

(3) If part of the distribution is not paid in respect of chargeable profits—

(a) for the purposes of this Part and Part 2 of TIOPA 2010 that part of the distribution is treated as a separate distribution, and

(b) subsection (2) does not apply to that separate distribution.

(4) In this section references to chargeable profits of the CFC are limited to chargeable profits so far as apportioned to chargeable companies at step 3 in section 371BC (1) of TIOPA 2010.”

31 In section 931E (distributions from controlled companies) for subsections (3) to (5) substitute—

“(3) Condition B is that—

(a) the recipient is one of two persons who, taken together, control the payer,

(b) the recipient has interests, rights and powers representing at least 40% of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer, and

(c) the second person has interests, rights and powers representing—

(i) at least 40%, but

(ii) no more than 55%,

of the holdings, rights and powers in respect of which the recipient and the second person fall to be taken as controlling the payer.

(4) For the purposes of subsection (3)—

(a) section 371RB of TIOPA 2010 (read with section 371RD of that Act) applies for the purpose of determining if two persons, taken together, control the payer, and

(b) section 371RD of that Act applies for the purpose of determining if the requirements of paragraphs (b) and (c) are met in any case.

(5) In subsection (4) references to section 371RD of TIOPA 2010 are to that section omitting subsection (3)(c) and (d).”

FA 2009

32 Part 2 of Schedule 16 to FA 2009 (amendment of exempt activities exemption) is amended as follows.

33 In paragraph 12—

(a) in sub-paragraph (2) omit paragraph (b) and the “and” before it, and

(b) after sub-paragraph (2) insert—

“(3) The amendments made by this Part have no effect in relation to a qualifying holding company.”

34 Omit paragraph 15.

35 In paragraph 16—

(a) in paragraph (a) after “2009” insert “but before 1 January 2013”, and

(b) omit paragraph (b) and the “and” before it.

36 In the cross-heading before paragraph 17 for “during three years before 1 July 2012” substitute “from 1 July 2009”.

CTA 2010

37 CTA 2010 is amended as follows.

38 In section 398D (restriction on use of losses) for subsection (6) substitute—

“(6) Subsection (6A) applies if A is a CFC within the meaning of Part 9A of TIOPA 2010 and the CFC charge is charged in relation to the accounting period ending with the relevant day.

(6A) No sum may be set off under section 371UD of TIOPA 2010 against the sum charged on a chargeable company so far as the sum charged is attributable to the CFC’s chargeable profits so far as, in turn, attributable to the carrying on of the relevant activity.”

39 In section 1139 (definition of “tax advantage”) in subsection (2) —

(a) omit the “or” after paragraph (d), and

(b) after paragraph (d) insert—

“(da) the avoidance or reduction of a charge or assessment to a charge under Part 9A of TIOPA 2010 (controlled foreign companies), or”.

TIOPA 2010

40 TIOPA 2010 is amended as follows.

41 (1) Section 314 (financing income amounts) is amended as follows.

(2) In subsection (1) after “D” insert “or that is determined in accordance with section 314A”.

42 After section 314 insert—

“314A The finance income amounts of a chargeable company under Part 9A

(1) This section applies if—

(a) a sum is charged on a company at step 5 in section 371BC (1)(controlled foreign companies: charging the CFC charge),

(b) the relevant corporation tax accounting period (as defined in section 371BC (3)) is a relevant accounting period of the company in relation to a period of account of the worldwide group, and

(c) the CFC’s chargeable profits mentioned in paragraph (a) at step 5 in section 371BC (1) include amounts (“the relevant finance profits”) which fall only within Chapter 5 or 6 of Part 9A or which are qualifying loan relationship profits within the meaning of Chapter 9 of Part 9A.

(2) An amount equal to P% of the relevant finance profits is to be taken to be a financing income amount of the company for the period of account of the worldwide group.

(3) “P%” has the meaning given by section 371BC (3).

(4) In subsection (1)(c) the reference to amounts which fall within Chapter 5 or 6 of Part 9A is limited to amounts—

(a) which so fall by virtue of section 297 or 299 of CTA 2009 (but not, in the case of section 299, as applied by section 574 of that Act), and

(b) which are not excluded credits (as defined in section 314(3) above).”

Part 4 Commencement provision

Commencement provision relating to controlled foreign companies etc

43 (1) The CFC charge is charged in relation to accounting periods of CFCs beginning on or after 1 January 2013.

(2) The first accounting period of a company which is a CFC at the beginning of 1 January 2013 begins at that time.

(3) Sub-paragraph (2) is subject to paragraph 44 below.

(4) This paragraph is to be read as if contained in Part 9A of TIOPA 2010.

44 (1) The repeal of Chapter 4 of Part 17 of ICTA by paragraph 14 above has no effect for accounting periods within the meaning of that Chapter (see section 751) beginning before 1 January 2013.

(2) Sub-paragraphs (3) and (4) apply to a company which—

(a) has an accounting period within the meaning of Chapter 4 of Part 17 of ICTA beginning before 1 January 2013 but ending on or after that date, and

(b) is not, at the end of 31 December 2012, a life assurance subsidiary.

(3) The company is not to have an accounting period within the meaning of Part 9A of TIOPA 2010 before its accounting period mentioned in sub-paragraph (2)(a) ends.

(4) If the company is a CFC immediately after the end of its accounting period mentioned in sub-paragraph (2)(a), its first accounting period within the meaning of Part 9A of TIOPA 2010 begins at that time.

(5) Sub-paragraph (6) applies to a company which—

(a) apart from sub-paragraph (6), would have an accounting period within the meaning of Chapter 4 of Part 17 of ICTA beginning before 1 January 2013 but ending on or after that date, and

(b) is, at the end of 31 December 2012, a life assurance subsidiary.

(6) The company’s accounting period mentioned in sub-paragraph (5)(a) ends at the end of 31 December 2012 (and, accordingly, paragraph 43(2) above applies in relation to the company if it is a CFC at the beginning of 1 January 2013).

(7) “Life assurance subsidiary” means a company in which a life assurance company has a relevant interest as determined in accordance with Chapter 15 of Part 9A of TIOPA 2010.

(8) “Life assurance company” means a company carrying on life assurance business within the meaning of Part 2 of this Act (see section 56).

(9) The amendments made by paragraphs 11, 12, 13, 16, 17, 19, 20, 21, 22, 23, 25, 26, 27(2) and (4), 28, 29 and 38 above are to be ignored so far as appropriate in consequence of the sub-paragraphs above.

45 The amendment made by paragraph 27(3) above has no effect for relevant periods beginning before 1 January 2013 (and the relevant provisions of Chapter 4 of Part 17 of ICTA continue to have effect accordingly notwithstanding the repeal of that Chapter by paragraph 14 above).

46 The amendment made by paragraph 30 above has no effect in relation to dividends or other distributions received before 1 January 2013.

47 The amendment made by paragraph 31 above has no effect in relation to dividends or other distributions received before 1 January 2013 (and the relevant provisions of Chapter 4 of Part 17 of ICTA continue to have effect accordingly notwithstanding the repeal of that Chapter by paragraph 14above).

48 The amendments made by paragraphs 33 to 36 above are treated as having come into force on 30 June 2012.

Commencement provision relating to foreign permanent establishments

49 (1) The amendments made by paragraphs 3, 5 and 9 above come into force on 1 January 2013; but the amendment made by paragraph 5(3) above has no effect in relation to elections made before that date.

(2) The amendments made by paragraphs 4 and 6 to 8 above have effect for relevant accounting periods beginning on or after 1 January 2013.

Part 5 Transitional provision

Exempt periods

50 (1) This paragraph applies if—

(a) there is an exempt period in relation to a company under Part 3A of Schedule 25 to ICTA (cases in which section 747(3) of ICTA does not apply) which begins before 1 January 2013,

(b) the exempt period does not end at or before the end of the company’s last accounting period within the meaning of Chapter 4 of Part 17 of ICTA, and

(c) the company is a CFC immediately after the end of its last accounting period mentioned in paragraph (b) and its first accounting period within the meaning of Part 9A of TIOPA 2010 begins at that time accordingly.

(2) The remainder of the exempt period is to be treated as an exempt period of the company for the purposes of Chapter 10 of Part 9A of TIOPA 2010.

(3) The remainder of the exempt period is to be determined in accordance with paragraph 15F of Schedule 25 to ICTA and, for this purpose, assume that Chapter 4 of Part 17 of ICTA continues to apply in relation to the company as if that Chapter had not been repealed by paragraph 14 above; and section 371JD of TIOPA 2010 is to be ignored accordingly.

(4) Section 371JB of TIOPA 2010 applies in relation to the exempt period as if subsection (1)(b) and (c) were omitted.

(5) Section 371JE of TIOPA 2010 applies in relation to the exempt period as if subsection (1)(b) were omitted.

(6) Section 371JF of TIOPA 2010 does not affect the application of the exempt period exemption by virtue of this paragraph.

Designer rate tax provisions

51 (1) The Controlled Foreign Companies (Designer Rate Tax Provisions) Regulations 2000 (S.I. 2000/3158S.I. 2000/3158) are to have effect for the purposes of section 371ND of TIOPA 2010 as if they had been made by the HMRC Commissioners under that section.

(2) The power of the HMRC Commissioners to make regulations under that section includes power to revoke or amend the 2000 Regulations for the purposes of that section.

Section 183

SCHEDULE 21 Relief in respect of decommissioning expenditure

Restriction of relief available in respect of decommissioning expenditure

1 Part 8 of CTA 2010 (oil activities) is amended as follows.

2 In section 330 (supplementary charge in respect of ring fence trades), at the end of subsection (2) insert—

“See also sections 330A and 330B (which provide for the amount of adjusted ring fence profits to be further adjusted where decommissioning expenditure has been taken into account).”

3 After section 330 insert—

“330A Decommissioning expenditure taken into account in calculating ring fence profits

(1) This section applies where—

(a) any decommissioning expenditure is taken into account in calculating the amount mentioned in paragraph (a) of subsection (3) of section 330 or the amount mentioned in paragraph (b) of that subsection, and

(b) if that expenditure were not so taken into account, the amount of the adjusted ring fence profits of the company for the accounting period would be greater than nil.

(2) In calculating for the purposes of section 330(1) the amount of the adjusted ring fence profits of the company for the accounting period, there is to be added an amount equal to the appropriate fraction of the used-up amount of that expenditure.

(3) For the purposes of this section—

• “the appropriate fraction” is

  

  —

  where SC is the percentage specified in section 330(1) for the accounting period, and

• “the used-up amount”, in relation to any expenditure, is the difference between—

  (a)

  the adjusted ring fence profits of the company for the accounting period determined in the absence of this section (which may be nil), and

  (b)

  what the adjusted ring fence profits of the company for that accounting period would be if that expenditure were not taken into account as mentioned in subsection (1).

(4) In determining for the purposes of this section whether, and to what extent, any losses which have been taken into account as mentioned in subsection (1) are attributable to decommissioning expenditure—

(a) assume that any amounts of any other expenditure which could be taken into account in calculating those losses are

taken into account before any amounts of decommissioning expenditure, and

(b) where any losses have been surrendered in accordance with Part 5, the company must specify, in accordance with a basis determined jointly by the company, the surrendering company (if different) and any other claimant company, whether any of those losses is attributable to decommissioning expenditure.

(5) But if paragraph (a) of subsection (4) would work unfavourably in the company’s case, the company may elect for that paragraph not to apply in relation to it and for any amounts of expenditure which could be taken into account in calculating those losses instead to be taken into account in the order specified in the election.

(6) In determining for the purposes of this section the used-up amount of decommissioning expenditure, assume that any other amounts that could be deducted in calculating the adjusted ring fence profits of the company for the accounting period have already been so deducted.

(7) But if subsection (6) would work unfavourably in the company’s case, the company may elect for that subsection not to apply in relation to it and for any amounts that could be deducted in calculating those adjusted ring fence profits instead to be deducted in the order specified in the election.

(8) For the purposes of this section, any deduction made under section 330B is to be disregarded.

(9) This section does not apply in relation to any accounting period for which the percentage specified in section 330(1) is less than or equal to 20% (including any accounting period beginning before 24 March 2011 and ending on or after that date).

(10) In this section—

• “claimant company” and “surrendering company” are to be read in accordance with Part 5 (see section 188), and

• “decommissioning expenditure” has the meaning given by section 330C.

330B Decommissioning expenditure taken into account for PRT purposes

(1) This section applies where—

(a) any decommissioning expenditure is taken into account in calculating the assessable profit accruing to a participator in any chargeable period from an oil field, and

(b) if that expenditure were not so taken into account, the amount of petroleum revenue tax with which the participator would be chargeable in respect of the field for the chargeable period would be greater than nil.

(2) In calculating for the purposes of section 330(1) the amount of the participator’s adjusted ring fence profits for the relevant accounting period, there is to be deducted an amount equal to the appropriate fraction of the PRT difference.

(3) For the purposes of this section—

• “the appropriate fraction” is

  

  where SC is the percentage specified in section 330(1) for the relevant accounting period, and

• “the PRT difference” is the difference between—

  (a)

  the amount of petroleum revenue tax with which the participator is chargeable for the chargeable period (which may be nil), and

  (b)

  the amount of petroleum revenue tax with which the participator would be chargeable for that chargeable period if the decommissioning expenditure were not taken into account as mentioned in subsection (1).

(4) In determining for the purposes of this section whether, and to what extent, any allowable losses which have been taken into account as mentioned in subsection (1) are attributable to decommissioning expenditure, assume that any amounts of any other expenditure which could be taken into account in calculating those losses are taken into account before any amounts of decommissioning expenditure.

(5) But if subsection (4) would work unfavourably in the participator’s case, the participator may elect for that subsection not to apply in relation to it and for any amounts of expenditure which could be taken into account in calculating those losses instead to be taken into account in the order specified in the election.

(6) This section does not apply in relation to any accounting period for which the percentage specified in section 330(1) is less than or equal to 20% (including any accounting period beginning before 24 March 2011 and ending on or after that date).

(7) In this section—

• “assessable profit” and “allowable loss” have the same meaning as in Part 1 of OTA 1975 (see section 2 of that Act),

• “decommissioning expenditure” has the meaning given by section 330C, and

• “the relevant accounting period”—

  (a)

  in a case where section 301 applies, is to be construed in accordance with subsection (7) of that section, and

  (b)

  in any other case, means the accounting period for which a deduction in respect of any petroleum revenue tax with which the participator may be chargeable for the chargeable period mentioned in subsection (1) would be made under section 299(2) (deduction of PRT in calculating income for corporation tax purposes).

330C Meaning of “decommissioning expenditure”

(1) In sections 330A and 330B “decommissioning expenditure” means expenditure incurred in connection with—

(a) demolishing any plant or machinery,

(b) preserving any plant or machinery pending its reuse or demolition,

(c) preparing any plant or machinery for reuse,

(d) arranging for the reuse of any plant or machinery, or

(e) the restoration of any land.

(2) It is immaterial for the purposes of subsection (1)(b) whether the plant or machinery is reused, is demolished or is partly reused and partly demolished.

(3) It is immaterial for the purposes of subsection (1)(c) and (d) whether the plant or machinery is in fact reused.

(4) In subsection (1)(e) “restoration” includes landscaping.

(5) The Treasury may by order amend this section.

(6) An order under subsection (5) may include transitional provision and savings.”

4 In section 7 of FA 2011 (increase in rate of supplementary charge), in subsection (6), at the end insert—

“See also sections 330A and 330B of CTA 2010 (which have effect in relation to the separate accounting period consisting of so much of the straddling period as falls on or after 24 March 2011).”

Extension of loss relief available in respect of decommissioning expenditure

5 (1) In Chapter 2 of Part 4 of CTA 2010 (relief for trade losses), section 40 (ring fence trades: extension of periods for which relief may be given) is amended as follows.

(2) In subsection (1)(b), for the words from “for which” to the end substitute “for which any allowances under section 164 or 403 of CAA 2001 are made to the company in respect of decommissioning expenditure”.

(3) In subsection (3)—

(a) for “the allowance” substitute “the sum of the allowances”, and

(b) for “that allowance” substitute “that amount”.

(4) After that subsection insert—

“(3A) In this section “decommissioning expenditure” has the meaning given by section 330C.”

Application

6 (1) The amendments made by this Schedule have effect in relation to expenditure incurred in connection with decommissioning carried out on or after 21 March 2012.

(2) In sub-paragraph (1) “decommissioning” means anything falling within any of paragraphs (a) to (e) of section 330C(1) of CTA 2010 (as inserted by this Schedule).

Section 184

SCHEDULE 22 Reduction of supplementary charge for certain oil fields

Amendments of Chapter 7 of Part 8 of CTA 2010

1 In Part 8 of CTA 2010 (oil activities), Chapter 7 (reduction of supplementary charge for certain new oil fields) is amended as follows.

2 In section 334 (company’s pool of field allowances), for “new oil fields” substitute “eligible oil fields”.

3 (1) Section 337 (initial licensee to hold a field allowance) is amended as follows.

(2) In subsection (1)—

(a) for “an initial licensee in a new oil field” substitute “a licensee in an additionally-developed oil field or a new oil field (an “eligible oil field”) on the authorisation day”, and

(b) at the end insert “(and accordingly may hold more than one field allowance for the field at the same time)”.

(3) In subsection (2), omit “initial”.

(4) The heading of that section becomes “Licensee to hold field allowance”.

4 In section 338 (holding a field allowance on acquisition of equity share), for “a new oil field” substitute “an eligible oil field”.

5 In section 339 (unactivated amount of field allowance), in subsections (1) and (3), for “a new oil field” substitute “an eligible oil field”.

6 (1) Section 340 (introduction to section 341) is amended as follows.

(2) In subsection (1), for “a new oil field” substitute “an eligible oil field”.

(3) In subsection (5), for “the new oil field” substitute “the field”.

7 (1) Section 341 (activation of field allowance) is amended as follows.

(2) In subsection (1), for “the new oil field” substitute “the eligible oil field”.

(3) After subsection (3) insert—

“(4) Subsection (5) applies for the purpose of determining the amount of a company’s field allowance for an eligible oil field (“the relevant field allowance”) to be activated in a case where—

(a) the company holds one or more other field allowances for the field, and

(b) at the time when the company began to hold the relevant field allowance, the company already held one or more of those other field allowances (an “earlier field allowance”).

(5) The amount of the company’s relevant income from the field in the accounting period is to be reduced (but not to below nil) by the amount of any earlier field allowance activated in respect of the accounting period.

(6) In a case where the company began to hold two or more field allowances at the same time, the company may determine the order

in which the company is to be regarded for the purposes of this section as having begun to hold them.”

8 In section 342 (introduction to sections 343 and 344), in subsections (1) and (6), for “a new oil field” substitute “an eligible oil field”.

9 In section 343 (reference periods), in subsection (3), for “the new oil field” substitute “the eligible oil field”.

10 (1) Section 344 (activation of field allowance) is amended as follows.

(2) In subsection (1), for “the new oil field” substitute “the eligible oil field”.

(3) In subsection (4), for “the new oil field” substitute “the field”.

(4) After that subsection insert—

“(5) Subsection (6) applies for the purpose of determining the amount of a company’s field allowance for an eligible oil field (“the relevant field allowance”) to be activated in a case where—

(a) the company holds one or more other field allowances for the field, and

(b) at the time when the company began to hold the relevant field allowance, the company already held one or more of those other field allowances (an “earlier field allowance”).

(6) The amount of the company’s relevant income from the field in the reference period is to be reduced (but not to below nil) by the amount of any earlier field allowance activated in respect of the reference period.

(7) In a case where the company began to hold two or more field allowances at the same time, the company may determine the order in which the company is to be regarded for the purposes of this section as having begun to hold them.”

11 (1) Section 345 (introduction to sections 346 and 347) is amended as follows.

(2) In subsection (2)—

(a) for “a new oil field” substitute “an eligible oil field”, and

(b) for “the new oil field” substitute “the field”.

(3) In subsections (3) and (4), for “the new oil field” substitute “the field”.

(4) In subsection (6), for “a new oil field” substitute “an eligible oil field”.

12 (1) Section 346 (reduction of field allowance if equity disposed of) is amended as follows.

(2) In subsection (1), for “the new oil field” (in the first place it occurs) substitute “the eligible oil field”.

(3) In the definitions of “E1” and “E2”, for “the new oil field” substitute “the field”.

13 (1) Section 347 (acquisition of field allowance if equity acquired) is amended as follows.

(2) In subsection (1), for “the new oil field” substitute “the eligible oil field”.

(3) In subsection (2)—

(a) for “the new oil field” (in the first place it occurs) substitute “the eligible oil field”, and

(b) for “the new oil field” (in the second place it occurs) substitute “the field”.

(4) In subsection (4), for “the new oil field” substitute “the field”.