Centrica Energy Storage Limited v The Commissioners for HMRC
Decision date: 10 April 2026
Neutral citation: [2026] UKFTT 566 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerned whether Centrica Energy Storage Ltd (CESL) carried out "oil extraction activities" for its associated company Centrica Offshore UK Ltd (COUK) during 2017–2018 so that CESL's service fees fell within the ring fence. The Tribunal held the statutory wording, read with context and legislative history, covers activities performed by a company extracting gas under rights held by an associated company, and that CESL's services (including the 15% mark-up) were sufficiently proximate and operationally integral to extraction to be ring-fence income. The appeal was dismissed and HMRC's closure notices were upheld.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
When a company physically extracts oil or gas, or performs activities operationally integral to extraction, under rights authorising extraction held by an associated company, those activities fall within the statutory definition of "oil extraction activities" for ring-fence tax purposes; therefore fees for such services are ring-fence income.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal observed that the ring-fence rules were aimed at preventing the dilution of extraction profits by group losses/allowances and that the legislature anticipated different treatment for contractors unassociated with a licence-holder, who remain outside the ring fence.