Commentary

D7.922 Ring fence expenditure supplement

Corporate tax
Corporate tax | Commentary

D7.922 Ring fence expenditure supplement

Corporate tax | Commentary

Reliefs

D7.922 Ring fence expenditure supplement

Ring fence expenditure supplement (RFES) is available to those companies carrying on a ring fence trade or undertaking activities in contemplation of carrying on a ring fence trade1, who do not yet have any taxable income against which to offset exploration, appraisal and development costs and capital allowances2. RFES increases the value of unused expenditure carried forward from one period to another. The relevant percentage of RFES is currently set at 10% (for accounting periods beginning on or after 1 January 2012)3.

For accounting periods ending on or after 5 December 2013, RFES can be claimed for a maximum of ten years, which need not be consecutive4. The first six periods are referred to as the 'initial six periods'; the next four as the 'additional four periods'. The additional four periods can not be accounting periods beginning before 5 December 20135. Where an accounting period straddles 5 December 2013, the period before and after this date are treated as two separate accounting periods amounts apportioned accordingly6. Prior to 5 December 2013, RFES could be claimed for a maximum of six years. The extension to ten years removed the need for the extended ring fence supplement (D7.922A) and consequently it is repealed with effect from 5 December 20137.

The RFES supplement applies to:

  1.  

    (a)     qualifying pre-commencement expenditure incurred before the start of trading

  2.  

    (b)     losses incurred during trading; and supplement allowed in earlier periods as adjusted for disposal receipts under CAA 2001, s 555

  3.  

    (c)    

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