Section 356E | Activation of allowance: no change of equity share

(1)This section applies where—

(a)a company is a licensee in a licensed area for the whole or part (“the licensed part”) of an accounting period,

(b)the company's share of the equity in the site is the same throughout the accounting period or, as the case requires, throughout the licensed part of the accounting period,

(c)the licensed area is or contains a site,

(d)the company holds, for the accounting period and the site, a closing balance of unactivated allowance (see section 356EA) that is greater than zero, and

(e)the company has relevant income from the site for the accounting period.

(2)The amount of activated allowance the company has for that accounting period and that site is the smaller of—

(a)the closing balance of unactivated allowance held for the accounting period and the site;

(b)the company's relevant income for that accounting period from that site.

(3)In this Chapter “relevant income”, in relation to a site and an accounting period of a company, means production income of the company from any oil extraction activities carried on at the site that is taken into account in calculating the company's adjusted ring fence profits for the accounting period.