Finance Act 1991

108 Reimbursement by defaulter in respect of certain abandonment expenditure. U.K.

(1) This section applies in any case where—

(a) paragraph 2A of Schedule 5 to the principal Act F1 ... applies; and

[F2 (b) an amount is attributed to a contributing participator under paragraph 2A(2) of Schedule 5 to the principal Act; and]

(c) expenditure is incurred, or consideration in money’s worth is given, by the defaulter in reimbursing the [F3 contributing participator] in respect of, or otherwise making good to him, the whole or any part of the default payment;

and expressions used in this section have the same meaning as in the said paragraph 2A.

(2) In the following provisions of this section “reimbursement expenditure means expenditure incurred as mentioned in subsection (1)(c) above or consideration (or, as the case may require, the value of consideration) given as so mentioned; and any reference to the incurring of reimbursement expenditure shall be construed accordingly.

(3) Subject to subsection (5) below, in relation to the defaulter, reimbursement expenditure shall be treated for the purposes of the principal Act as if it were expenditure incurred by the defaulter for purposes falling within paragraph (i) of subsection (1) of section 3 of that Act.

(4) Subject to subsection (5) below, in computing under section 2 of the principal Act the assessable profit or allowable loss accruing to the [F4 contributing participator] from the oil field concerned in any chargeable period, the positive amounts for the purposes of that section (as specified in subsection (3)(a) thereof) shall be taken to include any reimbursement expenditure received by the [F4 contributing participator] in that period.

(5) In relation to a particular default payment, reimbursement expenditure incurred at any time—

(a) shall be treated as mentioned in subsection (3) above, and

(b) shall be taken to be included as mentioned in subsection (4) above,

only to the extent that, when aggregated with any reimbursement expenditure previously incurred in respect of that default payment, it does not exceed so much of the default payment as falls to be attributed to the [F5 contributing participator] as mentioned in subsection (1)(b) above.

(6) A claim by the defaulter for the allowance of reimbursement expenditure by virtue of subsection (3) above shall be made under Schedule 6 to the principal Act (instead of under Schedule 5); and, for this purpose only, Schedule 6 to that Act shall have effect as if, in sub-paragraph (1) of paragraph 1, the words from “if the participator” onwards were omitted.

(7) The incurring of reimbursement expenditure shall not be regarded, by virtue of paragraph 8 of Schedule 3 to the principal Act (certain subsidised expenditure to be disregarded), as the meeting of the expenditure of the [F6 contributing participator] in making the default payment.

Textual Amendments

F1 Words in s. 108(1)(a) omitted (with effect in relation to expenditure incurred after 30.6.2008) by virtue of Finance Act 2008 (c. 9), s. 105(2) (with s. 105(8))

F2 S. 108(1)(b) substituted (with effect in relation to expenditure incurred after 30.6.2008) by Finance Act 2008 (c. 9), s. 105(3) (with s. 105(8))

F3 Words in s. 108(1)(c) substituted (with effect in relation to expenditure incurred after 30.6.2008) by Finance Act 2008 (c. 9), s. 105(4) (with s. 105(8))

F4 Words in s. 108(4) substituted (with effect in relation to expenditure incurred after 30.6.2008) by Finance Act 2008 (c. 9), s. 105(5) (with s. 105(8))

F5 Words in s. 108(5) substituted (with effect in relation to expenditure incurred after 30.6.2008) by Finance Act 2008 (c. 9), s. 105(6) (with s. 105(8))

F6 Words in s. 108(7) substituted (with effect in relation to expenditure incurred after 30.6.2008) by Finance Act 2008 (c. 9), s. 105(7) (with s. 105(8))