Capital Allowances Act 2001

163 [F1 Meaning of “general decommissioning expenditure”] U.K.

[F2 (1) Expenditure is “general decommissioning expenditure” for the purposes of sections 164 and 165 if

[F3 (a)] the conditions in [F4 subsections (3), (3A) and (4)] are met[F5 , F6 ...

[F7 (aa) the condition in subsection (3AB) is met, or]

(b) the conditions in subsections (3B) and (4) are met.]

(2) But [F8 paragraphs (a) and (b) of subsection (1) are] subject to subsections (4ZA) to (4ZC).

(3) The expenditure must have been incurred on decommissioning plant or machinery—

(a) which has been brought into use [F9 wholly or partly] for the purposes of a ring fence trade, and

(b) which—

(i) is, or forms part of, an offshore installation or a submarine pipeline, or

(ii) when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation or pipeline.]

[F10 (3A) The expenditure must have been incurred wholly or substantially F11 ...—

(a) [F12 in complying with] an approved abandonment programme,

(b) [F13 in complying with] a condition to which the approval of an abandonment programme is subject, F14 ...

(c) [F15 in complying with] a condition imposed by the Secretary of State, or an agreement made with the Secretary of State—

(i) before the approval of an abandonment programme, and

(ii) in relation to the decommissioning of the plant or machinery[F16 , or

(d) otherwise in anticipation of a decommissioning measure.]]

[F17 (3AA) For the purposes of subsection (3A)(d), expenditure is incurred otherwise in anticipation of a decommissioning measure if it is incurred—

(a) in preserving plant or machinery, the reuse or demolition of which it is reasonable to anticipate will be authorised or required by an approved abandonment programme, a condition to which the approval of such a programme will be subject or a condition or agreement described in subsection (3A)(c), or

(b) in doing something else which it is reasonable to anticipate will be authorised or required by an approved abandonment programme, a condition to which the approval of such a programme will be subject or a condition or agreement described in subsection (3A)(c).]

[F18 (3AB) The condition in this subsection is met if—

(a) the expenditure was incurred—

(i) in preparing an abandonment programme for approval, or

(ii) in preparing for the imposition of a condition by, or the making of an agreement with, the Secretary of State before the approval of an abandonment programme, and

(b) it is reasonable to anticipate that the approved abandonment programme, the condition imposed or the agreement made, as the case may be, will wholly or mainly relate to the decommissioning of plant or machinery to which subsection (3) applies.]

[F19 (3B) The expenditure must have been incurred on decommissioning plant or machinery—

(a) which has been brought into use wholly or partly for the purposes of a ring fence trade, and

(b) which—

(i) is, or forms part of, a relevant onshore installation, or

(ii) when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation.

(3C) In subsection (3B) “relevant onshore installation” means any building or structure which—

(a) falls within any of sub-paragraphs (ii) to (iv) of section 3(4)(c) of OTA 1975,

(b) is not an offshore installation, and

(c) is or has been used for purposes connected with the winning of oil from an oil field any part of which lies within—

(i) the boundaries of the territorial sea of the United Kingdom, or

(ii) an area designated under section 1(7) of the Continental Shelf Act 1964.]

(4) The plant or machinery must not be replaced.

(4ZA) An amount of general decommissioning expenditure determined in accordance with [F20 subsection (1)(a) or (b)] is to be reduced under subsection (4ZB) if it appears that the decommissioned plant and machinery—

[F21 (a) was not brought into use wholly for qualifying purposes, or

(b) has, at any time since it was brought into use, not been used wholly for qualifying purposes].

(4ZB) The amount determined in accordance with [F22 subsection (1)(a) or (b)] is to be reduced to an amount which is just and reasonable having regard to the relevant circumstances.

(4ZC) The relevant circumstances include, in particular, the extent to which the decommissioned plant and machinery has not been used for [F23 qualifying purposes].

[F24 (4A) In this section “ decommissioning ”, in relation to any plant or machinery, means—

(a) demolishing the plant or machinery,

(b) preserving the plant or machinery pending its reuse or demolition,

(c) preparing the plant or machinery for reuse, or

(d) arranging for the reuse of the plant or machinery.

(4B) In determining whether expenditure is incurred on preserving plant or machinery pending its reuse or demolition, it is immaterial whether the plant or machinery is reused, is demolished or is partly reused and partly demolished.

(4C) In determining whether expenditure is incurred on preparing plant or machinery for reuse, or on arranging for the reuse of plant or machinery, it is immaterial whether the plant or machinery is in fact reused.]

[F25 (4D) In this section a reference to use for qualifying purposes is a reference to—

(a) use for the purposes of any ring fence trade of any person, or

(b) other use in—

(i) the United Kingdom,

(ii) the territorial sea of the United Kingdom, or

(iii) an area designated under section 1(7) of the Continental Shelf Act 1964,

except use wholly or partly in connection with an oil field (within the meaning given by section 12(2) of the Oil Taxation Act 1975).]

(5) In this section—

(a) [F26 “oil” and “oil field” have] the same meaning as in Part I of OTA 1975, and

(b) [F27 “abandonment programme”, “approval” and “approved” (in relation to an abandonment programme),] F28 ... “offshore installation” and “submarine pipeline” have the same meaning as in Part IV of the Petroleum Act 1998 (c. 17).

Textual Amendments

F1 S. 163 heading substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), s. 109(2)

F2 S. 163(1)-(3) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), s. 109(3)

F3 Words in s. 163(1) renumbered as s. 163(1)(a) (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(2)(a)

F4 Words in s. 163(1)(a) substituted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(2)(b)

F5 S. 163(1)(b) and word inserted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(2)(c)

F6 Word in s. 163(1)(a) omitted (with effect in accordance with s. 16(10) of the amending Act) by virtue of Finance Act 2021 (c. 26), s. 16(3)

F7 S. 163(1)(aa) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(3)

F8 Words in s. 163(2) substituted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(4)

F9 Words in s. 163(3)(a) inserted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(2)

F10 S. 163(3A) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 2(3)

F11 Words in s. 163(3A) omitted (with effect in accordance with s. 16(10) of the amending Act) by virtue of Finance Act 2021 (c. 26), s. 16(5)(a)

F12 Words in s. 163(3A)(a) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(b)

F13 Words in s. 163(3A)(b) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(c)(i)

F14 Word in s. 163(3A)(b) omitted (with effect in accordance with s. 16(10) of the amending Act) by virtue of Finance Act 2021 (c. 26), s. 16(5)(c)(ii)

F15 Words in s. 163(3A)(c) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(d)(i)

F16 S. 163(3A)(d) and word inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(d)(ii)

F17 S. 163(3AA) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(6)

F18 S. 163(3AB) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(7)

F19 S. 163(3B)(3C) inserted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(3)

F20 Words in s. 163(4ZA) substituted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(8)

F21 S. 163(4ZA)(a)(b) substituted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(3)

F22 Words in s. 163(4ZB) substituted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(8)

F23 Words in s. 163(4ZC) substituted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(4)

F24 S. 163(4A)-(4C) inserted (with effect as mentioned in Sch. 20 para. 9(1)(5)(8) of the amending Act) by Finance Act 2001 (c. 9), s. 68, Sch. 20 Pt. 2 para. 6(5)

F25 S. 163(4D) inserted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(5)

F26 Words in s. 163(5)(a) substituted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(4)

F27 Words in s. 163(5)(b) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 2(4)

F28 Words in s. 163(5)(b) omitted (with effect in accordance with s. 109(7) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 109(5)