PART 2

Oil

Decommissioning relief agreements

Terminal losses accruing by virtue of another's default
84
1
This section applies where—
a
a company defaults on a liability under—
i
a relevant agreement, or
ii
an abandonment programme,
to make a payment towards decommissioning expenditure in respect of an oil field,
b
in consequence of the default, another company (“the other company”) that has rights under a decommissioning relief agreement at the time of the default incurs decommissioning expenditure in respect of that oil field, and
c
but for paragraph 15 of Schedule 17 to FA 1980 (terminal losses), a sum (or a sum of a greater amount) would be payable to the other company under the decommissioning relief agreement.
2
Paragraph 15 of Schedule 17 to FA 1980 does not apply in relation to any allowable loss accruing to the other company from that oil field.
3
Any allowable unrelievable field loss (within the meaning of section 6 of OTA 1975) that—
a
consists of the unrelieved portion of an allowable loss within subsection (2), and
b
would (in the absence of this subsection) arise as a result of subsection (2),
is not to be regarded as arising.
4
Nothing in this section affects the operation of section 83(3) or (5).
5
In this section—
- “abandonment programme” means an abandonment programme approved under Part 4 of the Petroleum Act 1998 (including such a programme as revised),
- “company” has the meaning given by section 1121 of CTA 2010,
- “decommissioning expenditure” has the same meaning as in section 80,
- “decommissioning relief agreement” has the same meaning as in that section,
- “oil field” has the same meaning as in OTA 1975,
- “relevant agreement” has the meaning given by section 104(5)(a) of FA 1991, and
- “unrelieved portion”, in relation to an allowable loss, is to be read in accordance with section 6 of OTA 1975.