Taxes Consolidation Act 1997 section 690

Interest and charges on income

Section 690 restricts the deduction of interest as an expense of a petroleum trade and limits the extent to which charges on income and annual payments may be set off against petroleum profits.

• Interest paid to a connected person is limited to an arm's length amount, interest on borrowings for exploration activities is disallowed, and interest on borrowings to acquire petroleum rights from a connected person is disallowed.
• Interest paid by a company to a foreign parent resident in a tax treaty country may be treated as a deductible expense rather than a distribution, provided it would otherwise qualify and is not caught by the restrictions.
• Charges on income and annual payments paid to connected persons are disallowed against petroleum profits, and charges or payments not made wholly and exclusively for the purposes of a petroleum or mining trade are similarly disallowed.
• Petroleum profits are ring-fenced so that general charges and annual payments may only be set off against non-petroleum profits, and excess disallowed charges may be surrendered by way of group relief to the extent they exceed non-petroleum profits.