Commentary

D7.942 Calculation of profits—loan relationships

Corporate tax
Corporate tax | Commentary

D7.942 Calculation of profits—loan relationships

Corporate tax | Commentary

D7.942 Calculation of profits—loan relationships

Non-trading debits from a company's loan relationships cannot be set against the company's contractor's ring fence profits, unless the loan relationship represents money borrowed to finance oil contractor activities1. The legislation provides that debits incurred in respect of loan relationships are only deductible as an expense of the contractor's ring fence trade to the extent that the loan relationship is for money borrowed by the contractor which has been2:

  1.  

    (a)     used to meet expenditure incurred in carrying on oil contractor activities; or

  2.  

    (b)     appropriated to meeting such expenditure.

Abortive incidental costs of borrowing are deductible

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