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HMRC internal manual

Oil Taxation Manual

The DECC Role in the UK North Sea: decommissioning oil installations

DECC is also responsible for the development and implementation of Government policy on decommissioning offshore oil and gas installations and pipelines.

The Petroleum Act 1998 enables the DECC to place an obligation to decommissioning on the co-venturers of every offshore installation and the owners of every offshore pipeline on UKCS. The companies served with a notice become jointly and severally liable to submit a decommissioning programme for Ministerial approval and to ensure that the provisions of the programme are implemented. Any decommissioning programme needs to be compatible with the international rules for the protection of the environment during decommissioning, the OSPAR agreement. This applies to all oil assets except, broadly speaking, those assets where the weight or nature of the footings renders conventional removal impossible.

The availability and nature of tax relief for the costs of decommissioning an asset for PRT and CT capital allowances also depends on whether the decommissioning falls within a DECC approved programme. DECC can provide copies of approved decommissioning programmes to LBS Oil and Gas Sector.

There is detailed guidance on decommissioning on the DECC website which you can find at The tax impacts are considered at OT10000 (PRT) and OT28000 (RFCT Capital Allowances).