Finance Act 2009

Section 87

SCHEDULE 41 U.K. Oil assets put to other uses

Part 1 U.K. Petroleum revenue tax

Allowance of decommissioning and restoration expenditure U.K.

1 (1) Section 3 of OTA 1975 (allowance of expenditure) is amended as follows. U.K.

(2) In subsection (1C)(b), for “in connection with the field” substitute “ for a qualifying purpose ”.

(3) In subsection (1D), for “in connection with the field” substitute “ for a qualifying purpose ”.

(4) After that subsection insert—

“(1DA) In subsections (1C) and (1D) a reference to use for a qualifying purpose is a reference to—

(a) use in connection with the taxable field mentioned in subsection (1C), and

(b) other use in—

(i) the United Kingdom,

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

(iii) a designated area,

except use wholly or partly for an ineligible oil purpose.

(1DB) In subsection (1DA)(b) the reference to use for an ineligible oil purpose is a reference to—

(a) use in connection with an oil field other than the taxable field mentioned in subsection (1C), and

(b) use for any other purpose (apart from a purpose falling within section 3(1)(b)) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988.

(1DC) In subsections (1DA) and (1DB) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of the Oil Taxation Act 1983, are tariff receipts.”

Amounts which are not chargeable tariff receipts U.K.

2 (1) Section 6 of OTA 1983 (amounts which are not chargeable tariff receipts) is amended as follows. U.K.

(2) In subsection (4)—

(a) in paragraph (b), insert at the end “or”, and

(b) after that paragraph insert—

“(c) is referable to other use of an asset, except use wholly or partly for an oil purpose,”.

(3) After that subsection insert—

“(4A) In this section the reference to use of an asset for an oil purpose is a reference to—

(a) use in connection with an oil field, and

(b) use for any other purpose (apart from a purpose falling within section 3(1)(b) of the principal Act) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988.

(4B) In subsection (4A) the reference to use in connection with an oil field includes use giving rise to receipts which, for the purposes of this Act, are tariff receipts.”

No reduction of allowable expenditure U.K.

3 (1) Paragraph 8 of Schedule 1 to OTA 1983 (allowable expenditure: use of new asset otherwise than in connection with taxable field) is amended as follows. U.K.

(2) In sub-paragraph (1)(a) and (b), for “in connection with a taxable field” substitute “ for a qualifying purpose ”.

(3) After sub-paragraph (2) insert—

“(2A) In sub-paragraph (1) a reference to use for a qualifying purpose is a reference to—

(a) use in connection with a taxable field, and

(b) other use in—

(i) the United Kingdom,

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

(iii) a designated area,

except use wholly or partly for an ineligible oil purpose.

(2B) In this Act a reference to use of an asset for an ineligible oil purpose is a reference to—

(a) use in connection with an oil field that is not a taxable field, and

(b) use for any other purpose (apart from a purpose falling within section 3(1)(b) of the principal Act) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988.

(2C) In sub-paragraphs (2A) and (2B) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of this Act, are tariff receipts.”

Commencement U.K.

4 U.K. The amendments made by this Part have effect in relation to chargeable periods beginning after 30 June 2009.

Part 2 U.K. Capital allowances

General decommissioning expenditure U.K.

5 (1) Section 163 of CAA 2001 (meaning of “general decommissioning expenditure”) is amended as follows. U.K.

(2) In subsection (3)(a), after “use” insert “ wholly or partly ”.

(3) In subsection (4ZA), for paragraphs (a) and (b) substitute—

“(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.”

(4) In subsection (4ZC), for “the purposes of the ring fence trade” substitute “ qualifying purposes ”.

(5) After subsection (4C) insert—

“(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).”

6 U.K. In section 165(4A) of CAA 2001 (general decommissioning expenditure after ceasing ring fence trade), for “abandonment expenditure” substitute “ general decommissioning expenditure ”.

Commencement U.K.

7 (1) The amendments made by paragraph 5 have effect in relation to expenditure incurred on or after 22 April 2009. U.K.

(2) The amendment made by paragraph 6 has effect in relation to ring fence trades that cease to be carried on or after 12 March 2008.