OT21069 | Corporation Tax Ring Fence: Losses and Group Relief: Change in Company Ownership: Major change in nature or conduct of a ring fence trade

Whether or not there has been a major change in the nature or conduct of a company’s trade will always depend on all the facts and circumstances.

The scope of a ring fence trade is set out in legislation (OT21002) and it will be unusual for HMRC to take the view that there has been a major change in the nature or conduct of the trade. You should contact the Oil and Gas Tax Policy and Technical Team in BAI if you are considering a case where you believe this legislation might apply to a ring fence trade.

In particular, HMRC would not consider any of the following individual changes, on their own, to be a major change in the nature or conduct of a company’s ring fence trade. Even in combination with each other and taken together, it’s unlikely that the changes below would be considered a major change in the company’s trade:

• a change from operatorship to non-operatorship, or vice-versa

• a change from being a sole licensee to working through a joint venture

• variation in the mix of hydrocarbons being produced

• a change in the company’s management personnel

• a change in the method of transportation of hydrocarbons, from tanker to pipeline, for example

It is also unlikely that HMRC would seek to argue that any of the following would be a major change in its own right:

• a change to the level of tariff income earned

• the addition of onshore licenses to a portfolio primarily consisting of off shore licenses, or vice versa.

• a change in the holding of licence interests where any relevant fields are at different stages in the oil lifecycle.

• a change in the level of decommissioning being undertaken.