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D7.935 Introduction to oil contractors

From 1 April 2014, oil contractor activities are treated as forming a separate trade of the oil contractor, subject to tax at the normal corporation tax rate (not the higher rates applicable to oil companies)¹. Where an accounting period straddles 1 April 2014, one period is treated as ending on 31 March 2014, and another as commencing on 1 April 2014. Losses carried forward can only be used within the ring fence if they would have fallen into it had the rules applied at the time the loss was made².

The ring fence requires that the profits of that activity are segregated from any wider trade, and are subject to restrictions in terms of loss reliefs (broadly, losses arising outside the ring fence cannot be sheltered by profits within it) and deductions for interest expenses and exchange gains and losses. However,