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HMRC internal manual

Oil Taxation Manual

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HM Revenue & Customs
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Decommissioning and abandonment: general decommissioning expenditure - decommissioned plant and machinery, expenditure incurred on or after 22 April 2009

CAA2001\S163(4ZA to 4ZC)

For expenditure incurred before 22 April 2009 there are restrictions on the amount of the general decommissioning expenditure (see OT28040) where it appears that the decommissioned plant and machinery

  • was brought into use partly for the purposes of the ring fence trade and partly for the purposes of another trade, or
  • was brought into use wholly for the purposes of the ring fence trade but has, at any time since, not been used wholly for ring fence trade purposes (CAA2001\S163(4ZA to 4ZC)).

For expenditure incurred on or after 22 April 2009 these rules (see OT28060) are amended so that relief for general decommissioning expenditure (see OT28045) is restricted if it appears that the decommissioned plant and machinery.

  • was not brought into use wholly for qualifying purposes, or
  • has, at any time since it was brought into use, not been used wholly for qualifying purposes.

Use for qualifying purposes is:

  • use for the purposes of any ring fence trade of any person, or
  • other use in

    • the United Kingdom,
    • the UK’s territorial sea, or
    • an area designated under S1(7) of the Continental Shelf Act 1964

except use wholly or partly in connection with an oil field (as defined by S12(2) OTA1975).

The circumstances to be taken into account in apportioning decommissioning expenditure include the extent to which the plant and machinery was not used for qualifying purposes. The reduction is made on a just and reasonable basis.