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HMRC internal manual

Corporate Intangibles Research and Development Manual

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Land Remediation Relief: Qualifying Land Remediation Expenditure: Expenditure incurred because of contamination or dereliction - examples

This section provides examples of how the guidance at CIRD63100 applies.

Example:

A Ltd purchases land that is contaminated with oil that has leaked from storage tanks.

A Ltd engages the services of a sub-contractor, B Ltd.

B Ltd excavates the soil, takes it away and subjects it to a process of bioremediation. At the end of the process B Ltd replaces the soil.

A Ltd removes and fills in the storage tanks.

The payment made by A Ltd to B Ltd qualifies because the whole of the work carried out by B Ltd is for the purpose of relevant land remediation. The work is done only because the soil is contaminated.

A Ltd cannot claim Land Remediation Relief for land in a contaminated state on the cost of removing the storage tanks and infilling. This is not a cost of removing the contamination. If the tanks are removed on or after 1 April 2009 relief may be available under Land Remediation Relief for long term derelict land, see CIRD62000 onwards.

Example:

C Ltd is re-developing a brown-field site as a residential estate. There are contaminants in the soil and C Ltd installs a membrane to prevent the contaminants migrating to the surface. C Ltd also imports top-soil and sub-soil for the gardens.

The cost of the top-soil and sub-soil does not qualify for Land Remediation Relief as C Ltd would have imported the soil, to improve the amenity value and provide a growing medium for garden plants and vegetables, whether or not the site was contaminated. So there is no additional cost caused only by the remediation. The cost of the membrane (or other break-layer) installed beneath the soil qualifies for Land Remediation Relief as it is only installed for the purpose of preventing harm that might otherwise ensue.

Example:

D Ltd is re-developing a brown-field site as a residential estate. There are contaminants in the soil and D Ltd imports topsoil to create a 1200mm capping layer over the contamination, double the depth that D Ltd normally uses to create amenity areas.

In this example, rather than using a membrane D Ltd has created a barrier using a greater depth of topsoil. Whilst this will still qualify for Land Remediation Relief, D Ltd cannot claim the whole cost of importing the top-soil. D Ltd would have imported topsoil to create a layer 600mm deep to improve the amenity value and provide a growing medium for garden plants and vegetables, whether or not the site was contaminated. D Ltd can claim the cost of the additional 600mm as that expenditure was only incurred because the land is in a contaminated state.