Taxes Consolidation Act 1997 section 694

Exploration expenditure incurred by certain companies

Section 694 provides a limited form of group relief allowing exploration expenditure incurred by one company to be transferred to and claimed by another company within the same wholly-owned group for the purposes of the petroleum trade.

• An exploration company may elect to transfer all or part of its exploration expenditure to a wholly-owned subsidiary, to its parent company, or to another wholly-owned subsidiary of its parent, provided the expenditure has not been reimbursed by any other person.
• Transferred expenditure is deemed to have been incurred by the receiving company at the time it was actually incurred by the exploration company, and is treated as incurred for the purposes of the receiving company's petroleum trade.
• The same exploration expenditure cannot be allowed against more than one trade, and expenditure relieved under this section cannot also qualify for any other allowance or deduction under the Tax Acts.
• A company is a wholly-owned subsidiary if all of its ordinary share capital is owned, directly or indirectly, by another company, with indirect ownership determined using the rules in paragraph 6 of Schedule 9.