Capital Allowances Act 2001

416 Expenditure on restoration within 3 years of ceasing to trade U.K.

(1) If—

(a) a person who has ceased to carry on a mineral extraction trade incurs expenditure on the restoration of a relevant site, and

(b) the expenditure is incurred within 3 years from the last day of trading and meets the further conditions in subsection (3),

the net cost of the restoration is qualifying expenditure.

(2) The qualifying expenditure is treated as incurred on the last day of trading.

(3) The further conditions are that the expenditure—

(a) has not been deducted in calculating for tax purposes the profits of any trade carried on by that person, and

(b) would have been—

(i) deductible in calculating the profits of the trade, or

(ii) capable of being qualifying expenditure under this Chapter,

if the expenditure had been incurred while the trade was being carried on.

(4) If any expenditure incurred by a person is qualifying expenditure under this section—

(a) the whole of the expenditure on the restoration (not just the net cost) is not deductible in calculating the person’s income for any tax purposes, and

(b) none of the amounts subtracted to produce the net cost is to be treated as the person’s income for any tax purposes.

(5) “Restoration” includes—

(a) landscaping,

(b) in relation to land in the United Kingdom, the carrying out of any works required as a condition of granting planning permission for development consisting of the winning and working of minerals, and

(c) in relation to land outside the United Kingdom, the carrying out of any works required by any equivalent condition imposed under the law of the territory in which the land is situated.

(6) A “relevant site” means—

(a) the site of a source to the working of which the mineral extraction trade related, or

(b) land used in connection with working such a source.

(7) “The net cost of the restoration” means the expenditure incurred on the restoration less any amounts—

(a) received within 3 years from the last day of trading, and

(b) attributable to the restoration of the relevant site (for instance, amounts for spoil or other assets removed from the site or for tipping rights).

(8) All such adjustments are to be made, by way of discharge or repayment of tax or otherwise, as are necessary to give effect to this section.