PART 1

Income tax, corporation tax and capital gains tax

Capital allowances: other measures

Meaning of “general decommissioning expenditure”
16
1
Chapter 13 of Part 2 of CAA 2001 (plant and machinery allowances: provisions affecting mining and oil industries) is amended as follows.
2
Section 163 (meaning of “general decommissioning expenditure” for purposes of sections 164 and 165) is amended as follows.
3
In subsection (1), at the end of paragraph (a), omit “or” and insert—
aa
the condition in subsection (3AB) is met, or
.
4
In subsection (2), for “that is” substitute “ paragraphs (a) and (b) of subsection (1) are ”.
5
In subsection (3A)—
a
in the words before paragraph (a), omit “in complying with”;
b
in paragraph (a), at the beginning insert “ in complying with ”;
c
in paragraph (b)—
i
at the beginning insert “ in complying with ”;
ii
at the end omit “or”;
d
in paragraph (c)—
i
at the beginning insert “ in complying with ”;
ii
at the end insert
, or
d
otherwise in anticipation of a decommissioning measure.
6
After subsection (3A) insert—
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).
7
After subsection (3AA) (inserted by subsection (6) of this section) insert—
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.
8
In each of subsections (4ZA) and (4ZB), for “subsection (1)” substitute “ subsection (1)(a) or (b) ”.
9
After section 163 insert—

Expenditure in anticipation of approval of abandonment programme
163A
1
Expenditure to which section 163(3A)(d) applies by virtue of section 163(3AA)(b) is to be treated as never having been general decommissioning expenditure for the purposes of sections 164 and 165 unless, before the end of the relevant period, condition A or condition B is met in relation to the expenditure.
2
Condition A is that—
a
an abandonment programme is approved, and
b
the programme, or a condition to which the approval of the programme was subject, authorises or requires the decommissioning of the plant or machinery to which the expenditure relates.
3
Condition B is that—
a
a condition is imposed by the Secretary of State, or an agreement is made with the Secretary of State, before the approval of an abandonment programme, and
b
the condition or, as the case may be, the agreement authorises or requires the decommissioning of the plant or machinery to which the expenditure relates.
4
For the purposes of this section “the relevant period” means the period—
a
beginning with the day on which the expenditure was incurred, and
b
ending with the fifth anniversary of the last day of the accounting period in which the expenditure was incurred.
5
All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).
6
If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, the person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.
7
A notice under subsection (6) must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.
8
In this section, “abandonment programme”, “approval” and “approved” (in relation to an abandonment programme) have the same meaning as in Part 4 of the Petroleum Act 1998.
10
The amendments made by this section have effect in relation to expenditure incurred on or after 3 March 2021.