4(1)Section 165 (general decommissioning expenditure after ceasing ring fence trade) is amended as follows.U.K.
(2)In subsection (1), for paragraph (b) substitute—
“(b)the decommissioning condition is met in relation to a notional accounting period, and”.
(3)After that subsection insert—
“(1A)The decommissioning condition is met in relation to a notional accounting period (the “relevant period”) if one or more of these paragraphs applies—
(a)the former trader incurs general decommissioning expenditure in the relevant period in respect of decommissioning carried out in that period,
(b)the former trader incurs general decommissioning expenditure in the relevant period in respect of decommissioning carried out in—
(i)a previous notional accounting period, or
(ii)a chargeable period falling before the first notional accounting period, and
(c)the former trader incurred general decommissioning expenditure in—
(i)a previous notional accounting period, or
(ii)a chargeable period falling before the first notional accounting period,
in respect of decommissioning that has not been carried out until the relevant period.
(1B)“Notional accounting period” means each of the following periods—
(a)the period that—
(i)begins with the day following the last day on which the former trader carried on the ring fence trade, and
(ii)ends with the day on which the first termination event subsequently occurs, and
(b)each period that—
(i)begins with the day following the last day of a period determined under paragraph (a) or this paragraph, and
(ii)ends with the day on which the first termination event subsequently occurs;
but there are to be no notional accounting periods after the end of the post-cessation period.
(1C)“Termination event”, in relation to a notional accounting period, means each of the following—
(a)the end of the period of 12 months beginning with the first day of the notional accounting period,
(b)the occurrence of an accounting date of the former trader or, if there is a period for which the former trader does not make up accounts, the end of that period (but see subsections (6A) and (6B)), and
(c)the end of the post-cessation period.”
(4)In subsection (3)—
(a)after “applies” insert “ in relation to a notional accounting period ”, and
(b)in paragraph (a), after “relevant decommissioning cost” insert “ for that period, or the aggregate of all the relevant decommissioning costs for that period, ”.
(5)In subsection (4), for the definition of “the relevant decommissioning cost” substitute—
““relevant decommissioning cost”, for a notional accounting period, means the amount by which general decommissioning expenditure falling within paragraph (a), (b) or (c) of subsection (1A) in relation to that period exceeds any amounts received before or during that period for the remains of any plant or machinery on whose demolition any of the general decommissioning expenditure was incurred.”
(6)After subsection (4A) insert—
“(4B)If an amount of general decommissioning expenditure is disproportionate to the relevant decommissioning carried out in the decommissioning period then, for the purposes of this section, only the allowable expenditure is to be taken to have been incurred in the expenditure period.
(4C)The application of subsection (4B) to an amount of general decommissioning expenditure does not prevent the non-allowable expenditure from being taken into account under this section in relation to a subsequent notional accounting period.
(4D)In subsections (4B) and (4C)—
“allowable expenditure”, in relation to general decommissioning expenditure, means the amount of the expenditure that is proportionate to the relevant decommissioning carried out in the decommissioning period;
“decommissioning period”, in relation to relevant decommissioning, means the notional accounting period or chargeable period in which the decommissioning was carried out;
“expenditure period”, in relation to general decommissioning expenditure, means the notional accounting period or chargeable period in which the expenditure was incurred;
“non-allowable expenditure”, in relation to general decommissioning expenditure, means so much of that expenditure as is not allowable expenditure;
“relevant decommissioning”, in relation to general decommissioning expenditure, means the decommissioning to which the expenditure relates.”
(7)After subsection (6) insert—
“(6A)If the former trader—
(a)carries on more than one trade,
(b)makes up accounts of any of them to different dates, and
(c)does not make up general accounts for the whole of the company's activities,
subsection (1C)(b) applies with reference to the accounting date of such one of the trades as the former trader may determine.
(6B)If the Commissioners for Her Majesty's Revenue and Customs are of the opinion, on reasonable grounds, that a date determined by the former trader for the purposes of subsection (6A) is inappropriate, the Commissioners may by notice direct that the accounting date of such other of the trades referred to in that subsection as appears to the Commissioners to be appropriate is to be used instead.”