Part 2 Plant and machinery allowances

Chapter 13 Provisions affecting mining and oil industries

Provisions relating to ring fence trades

164F1General decommissioning expenditure incurred before cessation of ring fence trade

F2(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 F3an officer of Revenue and Customs no later than 2 years after the end of F4the relevant chargeable period, and

(b)

is irrevocable.

(3)

The election must specify—

(a)

the F5general decommissioning expenditure to which it relates, F6...

F7(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

F8(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 F9... for F10the relevant chargeable period, and

F11(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.

F12(5)

The amount of the special allowance for F13the relevant chargeable period is equal to the amount of the general decommissioning expenditure to which the election relates.

F14(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).