(1)Where an election is made by a participator in an oil field (in this section referred to as "the receiving field"), up to 10 per cent. of certain expenditure incurred on or after 17th March 1987 in connection with another field, being a field which is for the purposes of this section a relevant new field, shall be allowable in accordance with this section in respect of the receiving field; and in the following provisions of this section the relevant new field in connection with which the expenditure was incurred is referred to as "the field of origin".
(2)An election under this section may be made only in respect of expenditure which—
(a)was incurred by the participator making the election or, if that participator is a body corporate, by an associated company; and
(b)as regards the field of origin, is allowable under section 3 or section 4 of the principal Act or section 3 of the [1983 c. 56.] Oil Taxation Act 1983; and
(c)as regards the field of origin, has been allowed as qualifying for supplement under section 2(9)(b)(ii) or (c)(ii) of the principal Act (in the following provisions of this section referred to as "supplement"); and
(d)is not expenditure falling within subsection (1) of section 5A of the principal Act (allowance of exploration and appraisal expenditure);
and Part I of Schedule 14 to this Act shall have effect with respect to elections under this section.
(3)A participator may not make an election under this section in respect of expenditure which was incurred before the date which is his qualifying date, within the meaning of section 113 of the [1984 c. 43.] Finance Act 1984 (restriction of PRT reliefs), in relation to the receiving field unless that date falls before the end of the first chargeable period in relation to that field.
(4)Where, by virtue of an election by. a participator under this section, an amount of expenditure is allowable in respect of the receiving field, it shall be allowable as follows—
(a)it shall be taken into account in that assessment to tax or determination relating to a chargeable period of the receiving field which is specified in Part II of Schedule 14 to this Act; and
(b)it shall be so taken into account under subsection (8) of section 2 of the principal Act (allowable expenditure etc.) as if, for the chargeable period in question, it were an addition to the sum mentioned in paragraph (a) of that subsection; and
(c)it shall be excluded in determining for the purposes of section 111(2) of the [1981 c. 35.] Finance Act 1981 (restriction of expenditure supplement) whether any, and if so what, assessable profit or allowable loss accrues to the participator in any chargeable period of the receiving field.
(5)Where, by virtue of an election by a participator under this section, an amount of expenditure is allowable in respect of the receiving field, that amount shall be disregarded in determining, as regards the field of origin, the amounts referred to (in relation to the participator or the associated company, as'the case may be) in paragraph (b) or paragraph (c) of subsection (9) of section 2 of the principal Act (allowable expenditure and supplement thereon).
(6)In Schedule 14 to this Act—
(a)Part III has effect to determine for the purposes of this section what is a relevant new field and who is an associated company of a participator making an election;
(b)Part IV contains provisions supplemental to and consequential upon the allowance of expenditure by virtue of an election under this section, including provisions applicable where a notice of variation is served in respect of expenditure which is already the subject of such an election;
(c)"the receiving field" and "the field of origin" have the meaning assigned by subsection (1) above;
(d)"the principal section" means this section;
(e)"election" means an election under this section; and
(f)"supplement" has the meaning assigned by subsection (2)(c) above.