Part III Oil Taxation
189 Transitional relief for certain exploration and appraisal expenditure.
1
This section applies in any case where—
a
a participator in an oil field or an associate incurs expenditure on or after 16th March 1993 and before 1st January 1995; and
b
apart from this section, that expenditure would not be allowable under section 5A of the principal Act (as amended by section 188 above); and
c
if section 188 above had not been enacted, the expenditure would be allowable in the case of the participator under section 5A of the principal Act; and
d
on 16th March 1993 the participator or the associate was a licensee in respect of the area to which the expenditure related.
2
In the following provisions of this section—
a
expenditure falling within subsection (1) above is referred to as “transitional E and A expenditure”; and
b
the participator in whose case that expenditure would be allowable as mentioned in paragraph (c) of that subsection is referred to as “the claimant”.
3
Subject to the following provisions of this section, so much of the transitional E and A expenditure incurred by the claimant or an associate as does not in the aggregate exceed £10 million shall be allowable in the case of the claimant under section 5A of the principal Act (as exploration and appraisal expenditure).
4
In subsections (1) to (3) above any reference to an associate of a participator applies only where the participator is a company and is a reference to another company—
a
which on 16th March 1993 was a member of the same group of companies as the participator; and
b
with which the participator is associated in respect of expenditure incurred by the other company;
and subsections (7) and (8) of section 5 of the principal Act (companies and associates etc.) apply for the purposes of this section as they apply for the purposes of that section.
5
Where—
a
the claimant is a company, and
b
on 16th March 1993 the claimant was a member of a group of companies, and
c
at least one other company which was a member of the group on that date was then a participator in an oil field, and
d
that other company is also the claimant in relation to an amount of transitional E and A expenditure,
subsection (3) above shall have effect as if references therein to the claimant were references to the aggregate of all those companies which on that date were members of the group and are the claimants in relation to any transitional E and A expenditure.
6
In this section, a group of companies means a company which is not a 51 per cent. subsidiary of any other company, together with each company which is its 51 per cent. subsidiary; and section 838 of the Taxes Act 1988 (subsidiaries) applies for the purposes of this section as it applies for the purposes of the Tax Acts (within the meaning of that Act).