Details of Schedule
2.Paragraph 2 amends section 163 of the Capital Allowances Act 2001 (CAA) to provide that general decommissioning expenditure must be incurred wholly or substantially to comply with an approved abandonment programme, or conditions associated with the approval of an abandonment programme. Sub-paragraph (3) inserts new subsection (3A) to this effect.
3.Paragraph 3 extends and amends section 164 of CAA to provide that the costs allowable for relief will be those costs of the accounting period that relate to the decommissioning work that is actually carried out in the accounting period.
4.New subsection 164 (1A) provides that Condition A applies in one or more of the situations where R incurs general decommissioning expenditure in the relevant chargeable period in respect of decommissioning:
carried out in that period;
carried out in a previous chargeable period; or
that has not been carried out until the relevant chargeable period.
5.Sub-paragraph (4) inserts new subsections (3)(aa), (ab) and (ac) into section 164 of CAA which provide what an election to have a special allowance must also specify.
6.Sub-paragraph (7) inserts new subsections (5A), (5B), (5C) and (5D) into section 164 of CAA.
7.New subsection (5B) provides that if the general decommissioning expenditure is not proportionate to the decommissioning work carried out in the chargeable period, then only the expenditure that is proportionate will be allowable.
8.New subsection (5D) provides, for subsections (5B) and (5C), definitions of “allowable expenditure”, “non-allowable expenditure”, “relevant decommissioning”, “specified decommissioning period” and “specified expenditure period”.
9.Paragraph 4 amends section 165 of CAA to provide for notional accounting periods within the post-cessation period.
10.Sub-paragraph (3) inserts new subsections (1A), (1B) and (1C) into section 165 of CAA.
11.New subsection (1A) provides that the decommissioning provision is met in relation to a notional accounting period if the former trader incurs general decommissioning expenditure in the relevant period in respect of decommissioning carried out in certain periods.
12.New subsection (1B) provides the meaning of “notional accounting period” for periods within the post-cessation period.
13.New subsection (1C) provides the meaning of “termination event” in relation to a notional accounting period.
14.Sub-paragraph (5) substitutes in section 165(4) of CAA a revised definition of “relevant decommissioning cost”
15.Sub-paragraph (6) inserts new subsections (4B), (4C), and (4D) into section 165 of CAA.
16.New subsection (4B) provides that if the general decommissioning expenditure is not proportionate to the decommissioning work carried out in the decommissioning period, then only the expenditure that is proportionate will be allowable.
17.New subsection (4D) provides, for subsections (4B) and (4C), definitions of “allowable expenditure”, “decommissioning period”, “expenditure period”, “non-allowable expenditure” and “relevant decommissioning”.
18.Sub-paragraph (7) inserts new subsections (6A) and (6B) into section 165 of CAA.