Part 5 Mineral extraction allowances
Chapter 4 Qualifying expenditure: second-hand assets
Assets reflecting expenditure on mineral exploration and access
408 Acquisition of oil licence from non-trader
1
This section applies if—
a
a person carrying on a mineral extraction trade (“the buyer”) incurs capital expenditure on acquiring an interest in an oil licence for the purposes of that trade,
b
the person from whom the interest was acquired (“the seller”) disposed of the interest without having carried on a mineral extraction trade,
c
part of the value of the interest is attributable to expenditure (“E1”) on mineral exploration and access by the seller, and
d
it is just and reasonable to attribute part of the buyer’s expenditure (“E2”) to that part of the value of the interest.
2
If this section applies—
a
so much of the buyer’s expenditure as is equal to the lesser of E1 and E2 is to be treated as qualifying expenditure on mineral exploration and access, and
b
the buyer’s expenditure on acquiring the interest in the oil licence is reduced by an amount equal to E2.
3
In this section “oil licence” and “interest in an oil licence” have the same meaning as in Chapter 3 of Part 12.