Modifications etc. (not altering text)
C1 S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7
Modifications etc. (not altering text)
C2Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
C3 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
C4 Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
C5 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
C6Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
C7Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
C8Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
C9Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
In this Chapter—
“mineral extraction trade”, and
“mineral exploration and access”
have the same meaning as in Part 5 (mineral extraction allowances).
For the purposes of this Part, expenditure incurred by a person—
(a)on the provision of plant or machinery for mineral exploration and access, and
(b)in connection with a mineral extraction trade carried on by him,
is to be treated as incurred for the purposes of that trade.
(1)This section applies if a person—
(a)incurs pre-trading expenditure on the provision of plant or machinery for the purposes of mineral exploration and access, and
(b)owns the plant or machinery on the first day of trading.
But this is subject to subsection (5).
(2)The person is to be treated for the purposes of this Part as if he had—
(a)sold the plant or machinery immediately before the first day of trading, and
(b)on that first day incurred capital expenditure on the provision of the plant or machinery for the purposes of the trade.
(3)The amount of the capital expenditure that the person is to be treated as having incurred is an amount equal to—
(a)the pre-trading expenditure, or
(b)if there has been an actual sale and re-acquisition before the first day of trading, the amount last incurred on the provision of the plant or machinery.
(4)In this section—
(a)“pre-trading expenditure” means capital expenditure incurred before the day on which a person begins to carry on a mineral extraction trade, and
(b)“the first day of trading”, in relation to a person’s pre-trading expenditure, means the day on which that person begins to carry on the mineral extraction trade.
(5)This section does not apply if the plant or machinery on which the pre-trading expenditure was incurred is sold, demolished, destroyed or abandoned before the first day of trading (but see section 402 (mineral extraction allowances: pre-trading expenditure on plant or machinery)).
Textual Amendments
F1Ss. 161A-161D and crossheading inserted (with effect as mentioned in Sch. 20 para. 9(1)-(4)(8) of the amending Act) by Finance Act 2001 (c. 9), s. 68, Sch. 20 para. 5(1)
(1) In sections 161C and 161D “ offshore infrastructure ” means—
(a)an offshore installation within the meaning given by section 44 of the Petroleum Act 1998 (c. 17) or a part of such an installation, or
(b) something that would be, or would be a part of, an offshore installation within that meaning if in subsection (3) of that section “ relevant waters ” meant waters in a foreign sector of the continental shelf and other foreign tidal waters, or
(c)a pipeline within the meaning of section 26 of that Act, or a part of such a pipeline, that is in, under or over waters in—
(i)the territorial sea adjacent to the United Kingdom, or
(ii)an area designated under section 1(7) of the Continental Shelf Act 1964 (c. 29), or
(d)a pipeline within the meaning of section 26 of the Petroleum Act 1998 (c. 17), or a part of such a pipeline, that is in, under or over waters in a foreign sector of the continental shelf.
(2)In subsection (1)(b) and (d)—
“ foreign sector of the continental shelf ” means an area within which rights are exercisable with respect to the sea bed and subsoil and their natural resources by a country or territory outside the United Kingdom;
“ foreign tidal waters ” means tidal waters in an area within which rights are exercisable with respect to the bed and subsoil of the body of water in question and their natural resources by a country or territory outside the United Kingdom.
(1) In sections 161C and 161D “ decommissioning expenditure ” means expenditure in connection with—
(a)preserving plant or machinery pending its reuse or demolition,
(b)preparing plant or machinery for reuse, or
(c)arranging for the reuse of plant or machinery.
(2)It is immaterial for the purposes of subsection (1)(a) whether the plant or machinery is reused, is demolished or is partly reused and partly demolished.
(3)It is immaterial for the purposes of subsection (1)(b) and (c) whether the plant or machinery is in fact reused.
(1)This section applies where—
(a)a person carrying on a trade of oil extraction incurs decommissioning expenditure, and
(b)the plant or machinery concerned—
(i)has been brought into use for the purposes of the trade, and
(ii)is, or was when last in use for those purposes, offshore infrastructure.
(2)The decommissioning expenditure is allocated to the appropriate pool for the chargeable period in which it is incurred.
(3)Subsection (2) is subject to sections 161D and 164(4).
(4) In subsection (2) “ the appropriate pool ” means the pool to which the expenditure on the plant or machinery concerned has been or would be allocated in accordance with this Part.
(1) Subsection (2) of section 161C does not apply to decommissioning expenditure on UK infrastructure unless it is incurred in connection with measures taken, wholly or substantially, in order to comply with—
(a)an abandonment programme within the meaning given by section 29 of the Petroleum Act 1998 (c. 17), or
(b)any condition to which the approval of such a programme is subject.
(2)Subsection (2) of section 161C does not apply to expenditure in respect of which an allowance or deduction could be made apart from that subsection in taxing, or computing, the person’s income for any tax purpose.
(3) For the purposes of subsection (1), decommissioning expenditure is “ on UK infrastructure ” if the plant or machinery concerned—
(a)is offshore infrastructure within section 161A(1)(a) or (c), or
(b)is not offshore infrastructure but was offshore infrastructure within section 161A(1)(a) or (c) when last in use for the purposes of the trade.]
(1)If a person carries on a ring fence trade, it is a separate qualifying activity for the purposes of this Part.
(2)In this Chapter “ring fence trade” means activities which—
(a)fall within [F2the definition of “oil-related activities” in section 16(2) of ITTOIA 2005] [F3or section 274 of CTA 2010], and
(b)constitute a separate trade (whether as a result of [F4section 16(1) of ITTOIA 2005 or] [F4section 16(1) of ITTOIA 2005 or] [F5section 279 of CTA 2010] or otherwise).
Textual Amendments
F2 Words in s. 162(2)(a) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 545(a) (with Sch. 2 )
F3Words in s. 162(2)(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 343(a) (with Sch. 2)
F4 Words in s. 162(2)(b) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 545(b) (with Sch. 2 )
F5Words in s. 162(2)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 343(b) (with Sch. 2)
[F7(1)Expenditure is “general decommissioning expenditure” for the purposes of sections 164 and 165 if the conditions in subsections [F8(3) to (4)] are met.
(2)But that is 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 [F9wholly 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 in complying with—
(a)an approved abandonment programme,
(b)a condition to which the approval of an abandonment programme is subject, or
(c)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.]
(4)The plant or machinery must not be replaced.
(4ZA)An amount of general decommissioning expenditure determined in accordance with subsection (1) is to be reduced under subsection (4ZB) if it appears that the decommissioned plant and machinery—
[F11(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 subsection (1) 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 [F12qualifying purposes].
[F13(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.]
[F14(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)“oil field” has the same meaning as in Part I of OTA 1975, and
(b)[F15“abandonment programme”, “approval” and “approved” (in relation to an abandonment programme),] F16... “offshore installation” and “submarine pipeline” have the same meaning as in Part IV of the Petroleum Act 1998 (c. 17).
Textual Amendments
F6S. 163 heading substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), s. 109(2)
F7S. 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)
F8Words in s. 163(1) substituted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 2(2)
F9Words 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)
F10S. 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)
F11S. 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)
F12Words 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)
F13S. 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)
F14S. 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)
F15Words 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)
F16Words 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)
[F18(1)A person (“R”) carrying on a ring fence trade may elect to have a special allowance made to R for a chargeable period (the “relevant chargeable period”) if conditions A and B are met.
(1A)Condition A is that one or more of these paragraphs applies—
(a)R incurs general decommissioning expenditure in the relevant chargeable period in respect of decommissioning carried out in that period;
(b)R incurs general decommissioning expenditure in the relevant chargeable period in respect of decommissioning carried out in a previous chargeable period;
(c)R incurred general decommissioning expenditure in a previous chargeable period in respect of decommissioning that has not been carried out until the relevant chargeable period.
(1B)Condition B is that the plant or machinery concerned has been brought into use for the purposes of the ring fence trade.]
(2)The election—
(a)must be made by notice to [F19an officer of Revenue and Customs] no later than 2 years after the end of [F20the relevant chargeable period, and]
(b)is irrevocable.
(3)The election must specify—
(a)the [F21general decommissioning expenditure] to which it relates, F22...
[F23(aa)the chargeable period in which the expenditure was incurred,
(ab)the decommissioning to which the expenditure relates,
(ac)the chargeable period in which the decommissioning was carried out, and]
[F24(b)where the plant or machinery concerned has been or is to be demolished, any amounts received for its remains.]
(4)If a person makes an election under this section—
(a)he is entitled to a special allowance F25... for [F26the relevant chargeable period, and]
[F27(b)neither of sections 26(3) and 161C(2)(net cost of demolition where plant or machinery not replaced, or cost of preparing for reuse, added to existing pool) applies.]
[F28(5)The amount of the special allowance for [F29the relevant chargeable period is equal to the amount of the general decommissioning expenditure to which the election relates.]
[F30(5A)But subsection (5) is subject to subsections (5B) and (6).
(5B)If an amount of general decommissioning expenditure to which the election relates is disproportionate to the relevant decommissioning carried out in the specified decommissioning period then, for the purposes of this section, the election is to be taken to specify only the allowable expenditure.
(5C)The application of subsection (5B) to an amount of general decommissioning expenditure does not prevent a person from making an election under this section for a subsequent chargeable period specifying the non-allowable expenditure.
(5D)In subsections (5B) and (5C)—
“allowable expenditure”, in relation to general decommissioning expenditure, means the amount of the expenditure that is proportionate to the relevant decommissioning carried out in the specified decommissioning period;
“non-allowable expenditure”, in relation to general decommissioning expenditure, means so much of that expenditure as is not allowable expenditure;
“relevant decommissioning”, in relation to general decommissioning expenditure, means the decommissioning to which the expenditure relates;
“specified decommissioning period”, in relation to relevant decommissioning, means the chargeable period specified in the election as the period in which the decommissioning was carried out;
“specified expenditure period”, in relation to general decommissioning expenditure, means the chargeable period specified in the election as the period in which the expenditure was incurred.]
(6)If plant or machinery is demolished, the total of any special allowances in respect of expenditure on decommissioning the plant or machinery is reduced by any amount received for the remains of the plant or machinery.
Here “ decommissioning ” has the meaning given by section 163(4A).
(7)Effect is given to subsection (6) by setting the amount (until wholly utilised)—
first, against any special allowance for the chargeable period in which the amount is received (as previously reduced in giving effect to subsection (6));
second, against special allowances for earlier chargeable periods (as so reduced and taking later such periods before earlier ones); and
third, against special allowances for later chargeable periods (as so reduced and taking earlier such periods before later ones). ]
Textual Amendments
F17Words in s. 164 heading substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 5(2)
F18S. 164(1)-(1B) substituted for s. 164(1) (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 3(2)
F19Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 83(1); S.I. 2005/1126, art. 2(2)(h)
F20Words in s. 164(2)(a) substituted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 3(3)
F21Words in s. 164(3)(a) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 5(3)
F22Word in s. 164(3)(a) omitted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 38 para. 3(4)(a)
F23S. 164(3)(aa)-(ac) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 3(4)(b)
F24S. 164(3)(b) substituted (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. 7(3)
F25Words in s. 164(4)(a) repealed (with effect as mentioned in Sch. 20 para.9(1)(5)(8) of the amending Act) by Finance Act 2001 (c. 9), s. 68, 110, Sch. 20 Pt. 2 para. 7(4), Sch. 33 Pt. 2(5) Note 1
F26Words in s. 164(4)(a) substituted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 3(5)
F27S. 164(4)(b) substituted (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. 7(5)
F28S. 164(5)-(7) substituted (with effect as mentioned in Sch. 20 para. 9(1)(5)(8) of the amending Act) for s. 164(5) by Finance Act 2001 (c. 9), s. 68, Sch. 20 Pt. 2 para. 7(6)
F29Words in s. 164(5) substituted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 3(6)
F30S. 164(5A)-(5D) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 3(7)
(1)This section applies if—
(a)a person (“the former trader”) has ceased to carry on a ring fence trade,
[F33(b)the decommissioning condition is met in relation to a notional accounting period, and]
(c)the [F34general decommissioning expenditure] is not otherwise deductible in calculating the income of the former trader for any tax purpose.
[F35(1A)The decommissioning condition is met in relation to a notional accounting period (the “relevant period”) if one or more of these paragraphs applies—
(a)the former trader incurs general decommissioning expenditure in the relevant period in respect of decommissioning carried out in that period,
(b)the former trader incurs general decommissioning expenditure in the relevant period in respect of decommissioning carried out in—
(i)a previous notional accounting period, or
(ii)a chargeable period falling before the first notional accounting period, and
(c)the former trader incurred general decommissioning expenditure in—
(i)a previous notional accounting period, or
(ii)a chargeable period falling before the first notional accounting period,
in respect of decommissioning that has not been carried out until the relevant period.
(1B)“Notional accounting period” means each of the following periods—
(a)the period that—
(i)begins with the day following the last day on which the former trader carried on the ring fence trade, and
(ii)ends with the day on which the first termination event subsequently occurs, and
(b)each period that—
(i)begins with the day following the last day of a period determined under paragraph (a) or this paragraph, and
(ii)ends with the day on which the first termination event subsequently occurs;
but there are to be no notional accounting periods after the end of the post-cessation period.
(1C)“Termination event”, in relation to a notional accounting period, means each of the following—
(a)the end of the period of 12 months beginning with the first day of the notional accounting period,
(b)the occurrence of an accounting date of the former trader or, if there is a period for which the former trader does not make up accounts, the end of that period (but see subsections (6A) and (6B)), and
(c)the end of the post-cessation period.]
[F36(2)“The post-cessation period” means the period that—
(a)begins with the day following the last day on which the former trader carried on the ring fence trade, and
(b)ends with the day on which condition A and condition B are both met (or, if they are met on different days, the later of those days).
(2A)Condition A is met if each approved abandonment programme that relates wholly or partly to relevant plant and machinery has ceased to have effect.
(2B)Condition B is met if the Secretary of State is satisfied that no other abandonment programmes that relate wholly or partly to relevant plant and machinery will be approved.
(2C)For the purposes of condition A, an approved abandonment programme ceases to have effect if and when—
(a)the programme has been carried out to the satisfaction of the Secretary of State, or
(b)approval of the programme has been withdrawn.]
(3)If this section applies [F37in relation to a notional accounting period]—
(a)an amount equal to the [F38relevant decommissioning cost] [F39for that period, or the aggregate of all the relevant decommissioning costs for that period,] is allocated to the appropriate pool for the chargeable period in which the former trader ceased to carry on the ring fence trade, and
(b)[F40where any of the [F41general decommissioning expenditure] was incurred on the demolition of plant or machinery,]any amount received within the post-cessation period for the remains of the plant or machinery does not constitute income of the former trader for any tax purpose.
(4)In subsection (3)—
“the appropriate pool” means the pool to which the expenditure on the demolished plant or machinery has been allocated, and
[F42“relevant decommissioning cost”, for a notional accounting period, means the amount by which general decommissioning expenditure falling within paragraph (a), (b) or (c) of subsection (1A) in relation to that period exceeds any amounts received before or during that period for the remains of any plant or machinery on whose demolition any of the general decommissioning expenditure was incurred.]
[F43(4A)[F44General decommissioning expenditure] is to be disregarded for the purposes of this section if the expenditure is incurred in decommissioning plant and machinery at a time—
(a)after an abandonment programme relating wholly or partly to the plant and machinery has had its approval withdrawn, and
(b)when no other abandonment programme relating wholly or partly to the plant and machinery is approved.]
[F45(4B)If an amount of general decommissioning expenditure is disproportionate to the relevant decommissioning carried out in the decommissioning period then, for the purposes of this section, only the allowable expenditure is to be taken to have been incurred in the expenditure period.
(4C)The application of subsection (4B) to an amount of general decommissioning expenditure does not prevent the non-allowable expenditure from being taken into account under this section in relation to a subsequent notional accounting period.
(4D)In subsections (4B) and (4C)—
“allowable expenditure”, in relation to general decommissioning expenditure, means the amount of the expenditure that is proportionate to the relevant decommissioning carried out in the decommissioning period;
“decommissioning period”, in relation to relevant decommissioning, means the notional accounting period or chargeable period in which the decommissioning was carried out;
“expenditure period”, in relation to general decommissioning expenditure, means the notional accounting period or chargeable period in which the expenditure was incurred;
“non-allowable expenditure”, in relation to general decommissioning expenditure, means so much of that expenditure as is not allowable expenditure;
“relevant decommissioning”, in relation to general decommissioning expenditure, means the decommissioning to which the expenditure relates.]
(5)All such adjustments, by discharge or repayment of tax or otherwise, are to be made as are necessary to give effect to this section.
[F46(6)For the purposes of this section, it does not matter if approval of an abandonment programme that relates to relevant plant and machinery (including approval of the first such programme) is given before or after the start of the post-cessation period.
[F47(6A)If the former trader—
(a)carries on more than one trade,
(b)makes up accounts of any of them to different dates, and
(c)does not make up general accounts for the whole of the company's activities,
subsection (1C)(b) applies with reference to the accounting date of such one of the trades as the former trader may determine.
(6B)If the Commissioners for Her Majesty's Revenue and Customs are of the opinion, on reasonable grounds, that a date determined by the former trader for the purposes of subsection (6A) is inappropriate, the Commissioners may by notice direct that the accounting date of such other of the trades referred to in that subsection as appears to the Commissioners to be appropriate is to be used instead.]
(7)In this section—
“abandonment programme” means an abandonment programme under Part 4 of the Petroleum Act 1998;
“approved”, in relation to an abandonment programme, means approved or revised under Part 4 of the Petroleum Act 1998 (and “approval” is to be construed accordingly);
“relevant plant and machinery” means plant and machinery—
which has been brought into use for the purposes of the ring fence trade that has ceased, and
which, when last in use for the purposes of that ring fence trade, was, or formed part of, an offshore installation or submarine pipeline;
and for this purpose “offshore installation” and “submarine pipeline” have the same meaning as in Part 4 of the Petroleum Act 1998;
“withdrawn”, in relation to approval of an abandonment programme, means withdrawn under Part 4 of the Petroleum Act 1998.]
Textual Amendments
F31Words in s. 165 heading substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 6(2)
F32Word in s. 165 heading substituted (with effect in accordance with s. 110(9) of the amending Act) by Finance Act 2008 (c. 9), s. 110(2)
F33S. 165(1)(b) substituted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 4(2)
F34Words in s. 165(1)(c) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 6(3)
F35S. 165(1A)-(1C) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 4(3)
F36S. 165(2)-(2C) substituted for s. 165(2) (with effect in accordance with s. 110(9) of the amending Act) by Finance Act 2008 (c. 9), s. 110(3)
F37Words in s. 165(3) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 4(4)(a)
F38Words in s. 165(3)(a) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 6(4)(a)
F39Words in s. 165(3)(a) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 4(4)(b)
F40Words in s. 165(3)(b) 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 para. 8(3)
F41Words in s. 165(3)(b) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 6(4)(b)
F42Words in s. 165(4) substituted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 4(5)
F43S. 165(4A) inserted (with effect in accordance with s. 110(9) of the amending Act) by Finance Act 2008 (c. 9), s. 110(4)
F44Words in s. 165(4A) substituted (with effect in accordance with Sch. 41 para. 7(2) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 6
F45S. 165(4B)-(4D) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 4(6)
F46S. 165(6)(7) inserted (with effect in accordance with s. 110(9) of the amending Act) by Finance Act 2008 (c. 9), s. 110(5)
F47S. 165(6A)(6B) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 4(7)
(1)This section applies if—
(a)there is, for the purposes of Schedule 17 to FA 1980, a transfer by a participator in an oil field of the whole or part of his interest in the field, and
(b)as part of the transfer, the old participator disposes of, and the new participator acquires—
(i)plant or machinery used, or expected to be used, in connection with the field, or
(ii)a share in such plant or machinery.
(2)The amount, if any, by which the new participator’s expenditure exceeds the old participator’s disposal value is to be left out of account in determining the new participator’s available qualifying expenditure.
(3)In subsection (2)—
(a)“the new participator’s expenditure” means the expenditure incurred by the new participator on the acquisition of the plant or machinery, and
(b)“the old participator’s disposal value” means the disposal value to be brought into account by the old participator as a result of the disposal of the plant or machinery to the new participator.
(4)In this section—
(a)“oil field” and “participator” have the same meaning as in Part I of OTA 1975,
(b)“the old participator” means the participator whose interest in the oil field is wholly or partly transferred, and
(c)“the new participator” means the person to whom the interest in the oil field is transferred.
(5)Nothing in this section affects the operation of Chapter 17 (anti-avoidance).
(1)Sections 168 to 170 apply if—
(a)a person (“the contractor”) is entitled to an interest in a contract made with, or with the authorised representative of, the government of a country or territory in which oil is or may be produced, and
(b)the contract provides (among other things) for any plant or machinery of a description specified in the contract which—
(i)is provided by the contractor, and
(ii)has an oil-related use under the contract,
to be transferred (immediately or later) to the government or representative.
(2)For the purposes of this section and sections 168 to 170, plant or machinery has an oil-related use if it is used—
(a)to explore for, win access to or extract oil,
(b)for the initial storage or treatment of oil, or
(c)for other purposes ancillary to the extraction of oil.
(3)In this section and sections 168 to 170 “oil” has the meaning given by section 556(3).
(1)This section applies if—
(a)the contractor incurs capital expenditure on the provision of plant or machinery of a description specified in the contract,
(b)the plant or machinery is to have an oil-related use under the contract, for the purposes of a trade of oil extraction carried on by the contractor,
(c)the amount of the expenditure is commensurate with the value of the contractor’s interest under the contract, and
(d)the plant or machinery is transferred to the government or representative in accordance with the contract.
(2)Despite the transfer, the plant or machinery is to be treated for the purposes of this Part as owned by the contractor (and not by any other person) until—
(a)it ceases to be owned by the government or representative, or
(b)it ceases to be used, or held for use, by any person under the contract.
This is subject to section 170(2).
(1)This section applies if—
(a)a person (“the participator”) acquires an interest in the contract from—
(i)the contractor, or
(ii)another person who has acquired it (directly or indirectly) from the contractor,
(b)the participator incurs capital expenditure on the provision of plant or machinery,
(c)the plant or machinery is to have an oil-related use under the contract, for the purposes of a trade of oil extraction carried on by the participator,
(d)the amount of the expenditure is commensurate with the value of the participator’s interest under the contract, and
(e)the plant or machinery is transferred to the government or representative in accordance with the contract.
(2)Despite the transfer, the plant or machinery is to be treated for the purposes of this Part as owned by the participator (and not by any other person) until—
(a)it ceases to be owned by the government or representative, or
(b)it ceases to be used, or held for use, by any person under the contract.
This is subject to section 170(2).
(1)This section applies if—
(a)a person (“the relevant participator”) acquires an interest in the contract from—
(i)the contractor, or
(ii)another person who has acquired it (directly or indirectly) from the contractor, and
(b)some of the expenditure incurred by the relevant participator to acquire the interest in the contract is attributable to plant or machinery which—
(i)is treated by section 168 as owned by the contractor, or
(ii)is treated by section 169 or subsection (2) as owned by another person (“the other participator”).
(2)The plant or machinery is to be treated for the purposes of this Part as owned by the relevant participator (and not by any other person) until—
(a)it ceases to be owned by the government or representative, or
(b)it ceases to be used, or held for use, by any person under the contract.
This is subject to a later application of this subsection.
(3)The person who, until subsection (2) applies, is treated as owning the plant or machinery is to be treated for the purposes of this Part as if he had disposed of it for a consideration equal to the relevant participator’s expenditure attributable to it.
(4)The relevant participator is to be treated for the purposes of this Part as if—
(a)he had incurred capital expenditure of an amount given by subsection (5), and
(b)he owned the plant or machinery (in accordance with subsection (2)) as a result of having incurred that expenditure.
(5)The amount of that expenditure is—
(a)the amount of the relevant participator’s expenditure attributable to the plant or machinery, or
(b)if less, the disposal value to be brought into account by the contractor or the other participator as a result of subsection (3).
(6)The expenditure attributable to plant or machinery for the purposes of this section is to be determined having regard to what is just and reasonable in the circumstances.
(1)This section applies if a person treated as owning plant or machinery under section 168(2), 169(2) or 170(2) ceases to be treated as owning it solely as a result of one of those provisions.
(2)If the person receives capital compensation, the disposal value to be brought into account is the amount of the compensation.
(3)If the person does not receive capital compensation, the disposal value to be brought into account is nil.
Modifications etc. (not altering text)
C10S. 171 excluded (E.W.S.) (8.6.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 14(2)(a); S.I. 2005/1444, art. 2(1), Sch. 1