Income arising from oil extraction activities or oil rights is known as ‘ring fence income’.

Where a person makes a loss in any trade, ‘sideways relief’ (see ¶261-000) is not allowed against ring fence income, except to the extent that the loss arises from oil extraction activities or oil rights (ITA 2007, s. 80). Both ‘oil extraction activities’ and ‘oil rights’ are defined (per ITTOIA 2005, s. 16), as follows.

Oil extraction activities

This concept is broadly defined (ITTOIA 2005, s. 225A) to mean activities of a person:

(1)in searching for oil in the UK or a designated area or causing such searching to be carried out for that person; or

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