OT21051 - Corporation Tax Ring Fence and Supplementary Charge

Set Off

ICTA88/s393A allows a company incurring a loss in a trade to set that loss against profits of the same AP of loss and of earlier APs during which the trade was being carried on. Where a company carrying on a petroliferous trade incurs a non-ring fence loss, ICTA88/s492(3) provides that that loss cannot be allowed against ring fence profits for purposes of ICTA88/s393A. There is no such restriction on ring fence losses which can, as with other losses, be carried back and allowed generally against profits including non-ring fence ones.

A loss may be carried back to be set against profits of the previous three years, unless the loss occurs in an AP ended before 1 April 1991 in which case the loss can only be carried back for one year. However, in this latter case, to the extent that the loss arises from abandonment relief it may be carried back for three years.

Loss carry back has again been restricted to one year from 1997.