Part 2

Plant and machinery allowances
Chapter 13

Provisions affecting mining and oil industries

Provisions relating to ring fence trades

Meaning of “general decommissioning expenditure”
163
1
Expenditure is “
general decommissioning expenditure
” for the purposes of sections 164 and 165 if
a
the conditions in
subsections (3), (3A) and (4)
are met
, ...
aa
the condition in subsection (3AB) is met, or
b
the conditions in subsections (3B) and (4) are met.
2
But
paragraphs (a) and (b) of subsection (1) are
subject to subsections (4ZA) to (4ZC).
3
The expenditure must have been incurred on decommissioning plant or machinery—
a
which has been brought into use
wholly or partly
for the purposes of a ring fence trade, and
b
which—
i
is, or forms part of, an offshore installation or a submarine pipeline, or
ii
when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation or pipeline.
3A
The expenditure must have been incurred wholly or substantially ...—
a
in complying with
an approved abandonment programme,
b
in complying with
a condition to which the approval of an abandonment programme is subject,
...
c
in complying with
a condition imposed by the Secretary of State, or an agreement made with the Secretary of State—
i
before the approval of an abandonment programme, and
ii
in relation to the decommissioning of the plant or machinery
, or
d
otherwise in anticipation of a decommissioning measure.
3AA
For the purposes of subsection (3A)(d), expenditure is incurred otherwise in anticipation of a decommissioning measure if it is incurred—
a
in preserving plant or machinery, the reuse or demolition of which it is reasonable to anticipate will be authorised or required by an approved abandonment programme, a condition to which the approval of such a programme will be subject or a condition or agreement described in subsection (3A)(c), or
b
in doing something else which it is reasonable to anticipate will be authorised or required by an approved abandonment programme, a condition to which the approval of such a programme will be subject or a condition or agreement described in subsection (3A)(c).
3AB
The condition in this subsection is met if—
a
the expenditure was incurred—
i
in preparing an abandonment programme for approval, or
ii
in preparing for the imposition of a condition by, or the making of an agreement with, the Secretary of State before the approval of an abandonment programme, and
b
it is reasonable to anticipate that the approved abandonment programme, the condition imposed or the agreement made, as the case may be, will wholly or mainly relate to the decommissioning of plant or machinery to which subsection (3) applies.
3B
The expenditure must have been incurred on decommissioning plant or machinery—
a
which has been brought into use wholly or partly for the purposes of a ring fence trade, and
b
which—
i
is, or forms part of, a relevant onshore installation, or
ii
when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation.
3C
In subsection (3B) “
relevant onshore installation
” means any building or structure which—
a
falls within any of sub-paragraphs (ii) to (iv) of section 3(4)(c) of
OTA
1975,
b
is not an offshore installation, and
c
is or has been used for purposes connected with the winning of oil from an oil field any part of which lies within—
i
the boundaries of the territorial sea of the United Kingdom, or
ii
an area designated under section 1(7) of the Continental Shelf Act 1964.
4
The plant or machinery must not be replaced.
4ZA
An amount of general decommissioning expenditure determined in accordance with subsection (1)(a) or (b) is to be reduced under subsection (4ZB) if it appears that the decommissioned plant and machinery—
a
was not brought into use wholly for qualifying purposes, or
b
has, at any time since it was brought into use, not been used wholly for qualifying purposes.
4ZB
The amount determined in accordance with subsection (1)(a) or (b) is to be reduced to an amount which is just and reasonable having regard to the relevant circumstances.
4ZC
The relevant circumstances include, in particular, the extent to which the decommissioned plant and machinery has not been used for qualifying purposes.
4A
In this section “
decommissioning
”, in relation to any plant or machinery, means—
a
demolishing the plant or machinery,
b
preserving the plant or machinery pending its reuse or demolition,
c
preparing the plant or machinery for reuse, or
d
arranging for the reuse of the plant or machinery.
4B
In determining whether expenditure is incurred on preserving plant or machinery pending its reuse or demolition, it is immaterial whether the plant or machinery is reused, is demolished or is partly reused and partly demolished.
4C
In determining whether expenditure is incurred on preparing plant or machinery for reuse, or on arranging for the reuse of plant or machinery, it is immaterial whether the plant or machinery is in fact reused.
4D
In this section a reference to use for qualifying purposes is a reference to—
a
use for the purposes of any ring fence trade of any person, or
b
other use in—
i
the United Kingdom,
ii
the territorial sea of the United Kingdom, or
iii
an area designated under section 1(7) of the Continental Shelf Act 1964,
except use wholly or partly in connection with an oil field (within the meaning given by section 12(2) of the Oil Taxation Act 1975).
5
In this section—
a
“oil” and “oil field” have the same meaning as in Part I of OTA 1975, and
b
“abandonment programme”, “approval” and “approved” (in relation to an abandonment programme), ... “offshore installation” and “submarine pipeline” have the same meaning as in Part IV of the Petroleum Act 1998 (c. 17).
S. 163(4A)-(4C) inserted (with effect as mentioned in Sch. 20 para. 9(1)(5)(8) of the amending Act) by Finance Act 2001 (c. 9), s. 68, Sch. 20 Pt. 2 para. 6(5)
Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
S. 163 heading substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), s. 109(2)
S. 163(1)-(3) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), s. 109(3)
Words in s. 163(5)(b) omitted (with effect in accordance with s. 109(7) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 109(5)
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
S. 163(3A) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 2(3)
Words in s. 163(5)(b) inserted (with effect in accordance with Sch. 38 para. 5 to the amending Act) by Finance Act 2009 (c. 10), Sch. 38 para. 2(4)
Words in s. 163(3)(a) inserted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(2)
S. 163(4ZA)(a)(b) substituted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(3)
Words in s. 163(4ZC) substituted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(4)
S. 163(4D) inserted (with effect in accordance with Sch. 41 para. 7(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 41 para. 5(5)
Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
Words in s. 163(1) renumbered as s. 163(1)(a) (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(2)(a)
Words in s. 163(1)(a) substituted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(2)(b)
S. 163(1)(b) and word inserted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(2)(c)
S. 163(3B)(3C) inserted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(3)
Words in s. 163(5)(a) substituted (with effect in accordance with s. 90(5) of the amending Act) by Finance Act 2013 (c. 29), s. 90(4)
Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)
S. 163(3AA) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(6)
S. 163(3AB) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(7)
S. 163(1)(aa) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(3)
Words in s. 163(4ZA) substituted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(8)
Words in s. 163(3A) omitted (with effect in accordance with s. 16(10) of the amending Act) by virtue of Finance Act 2021 (c. 26), s. 16(5)(a)
S. 163(3A)(d) and word inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(d)(ii)
Words in s. 163(2) substituted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(4)
Words in s. 163(3A)(a) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(b)
Words in s. 163(3A)(b) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(c)(i)
Word in s. 163(3A)(b) omitted (with effect in accordance with s. 16(10) of the amending Act) by virtue of Finance Act 2021 (c. 26), s. 16(5)(c)(ii)
Words in s. 163(3A)(c) inserted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(5)(d)(i)
Words in s. 163(4ZB) substituted (with effect in accordance with s. 16(10) of the amending Act) by Finance Act 2021 (c. 26), s. 16(8)
Word in s. 163(1)(a) omitted (with effect in accordance with s. 16(10) of the amending Act) by virtue of Finance Act 2021 (c. 26), s. 16(3)