688 Treatment of group relief

Summary

This section applies a 2 way ring-fence, for group relief purposes, with respect to profits and losses from petroleum activities. (The group relief provisions allow for the set-off, against the profits of a company in a group, of trading losses incurred and certain other amounts paid by another company in the same group. Both companies must be Irish resident companies.)

In effect, the section restricts group relief that may be claimed against petroleum profits to trading losses and surplus charges on income but only where these relate to a surrendering company’s own petroleum trade.

Details

Definitions

(1) The meanings of “claimant company” and “surrendering company” in section 411 are adopted for the purposes of this section.

Restriction on group relief

(2) Provision is made to ensure that —

• in general, losses or any other amounts which are within the scope of group relief cannot erode ring-fence profits, but
• ring-fence losses and excess charges on income which are related to the petroleum trade of the surrendering company may be offset against the claimant company’s petroleum profits. If the charges on income were paid to a connected person no group relief will be allowed.

The 2 way ring-fence is completed by providing that where the surrendering company incurs trading losses in its petroleum trade, or has an excess of charges on income consisting of payments made wholly and exclusively for the purposes of such a trade, those losses or excess charges cannot be allowed against the profits other than its petroleum profits (if any).

Relevant Date: Finance Act 2021