OT21075 - Corporation Tax Ring Fence and Supplementary Charge

Deduction of PRT

Under ICTA88/s500, PRT paid is allowed as a deduction in arriving at the taxable ring fence profits of a participator in an oil field. The deduction is the amount chargeable on and paid by the participator for a PRT chargeable period given against the ring fence income of the AP in or at the end of which the PRT chargeable period ends. If the chargeable period ends after the AP in or at the end of which the ring fence trade is permanently discontinued, the deduction is given against the profits of the AP in which that discontinuance occurs.

Where PRT for which a deduction has been given is repaid, the deduction is reduced by the amount of the repayment.

It follows that customers need to have a mechanism for keeping track of changes in PRT numbers for CT purposes. Some companies have well established systems but the general area is one to be borne in mind in examining returns and computations.