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HMRC internal manual

Oil Taxation Manual

Field allowance: previously decommissioned fields

The policy of the field allowance is to provide an incentive for development of economic but commercially marginal oil and gas fields. There is no policy reason to deny a field allowance to the redevelopment of a field that has previously been decommissioned. FA2011\S63 provides this with retrospective effect for accounting periods ending on or after 22 April 2009, and applies amended existing PRT legislation to determine whether a field has been decommissioned.

Accordingly, if all assets of an oil field which are relevant assets have been decommissioned, any authorisation of development in respect of that field which predates the decommissioning is ignored when determining whether an oil field is a new oil field.

An asset is a relevant asset of an oil field if it has ever been a qualifying asset in relation to any participator in the field, and has ever been used for the purpose of winning oil from the field.

The PRT legislation at para7 sch1 OTA 1975 applies to determine whether the qualifying assets of a relevant area are decommissioned, and is now applied to determine whether the relevant assets of an oil field are decommissioned.

**  This guidance is superseded by the introduction of the Investment Allowance legislation in Finance Act 2015. This applies to investment expenditure incurred on or after 1 April 2015.  The relevant legislation is in Part 8 Chapter 6A of CTA 2010.  Transitional rules are at paragraphs 7 and 8 of Part 2 Schedule 12 Finance Act 2015.  Full updated guidance will be provided shortly.  **