Section 356JF — Corporation Tax Act 2010: Generation of cluster area allowance

Generation of cluster area allowance 356JF 1 Subsection (2) applies where a company—

a is a licensee in a licensed area or sub-area which is wholly or partly included in a cluster area, and b incurs any relievable investment expenditure on or after 3 December 2014 in relation to the cluster area.

2 The company is to hold an amount of allowance equal to 62.5% of the amount of the expenditure. Allowance held under this Chapter is called “cluster area allowance”.

3 For the purposes of this section investment expenditure incurred by a company is “relievable” only if, and so far as, it is incurred for the purposes of oil-related activities (see section 274).

4 Subsections (1) to (3) are subject to section 356JFA (which prevents expenditure on the acquisition of an asset from being relievable in certain circumstances).

5 Cluster area allowance is said in this Chapter to be “generated” at the time when the investment expenditure is incurred (see section 356JN) and is referred to as being generated—

a “by” the company concerned;

b “in” the cluster area concerned.

6 Where—

a investment expenditure is incurred only partly for the purposes of oil-related activities, or b the oil-related activities for the purposes of which investment expenditure is incurred are carried on only partly in relation to a particular cluster area, the expenditure is to be attributed to the activities or area concerned on a just and reasonable basis.