Finance Act 2009

No reduction of allowable expenditure

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.

(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.”