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HMRC internal manual

Oil Taxation Manual

Decommissioning and Abandonment: Expenditure connected with reuse of offshore oil infrastructure: Meaning of decommissioning expenditure


CAA01\S161B gives the meaning of decommissioning expenditure for the purposes of CAA01\S161C and CAA01\S161D.

It means expenditure in connection with -

  1. preserving plant or machinery pending reuse or demolition,
  2. preparing plant or machinery for reuse, or
  3. arranging for the reuse of plant or machinery.

Although there are similarities, it should be noted that this is a different definition to that of decommissioning (see OT28050) and general decommissioning expenditure (see OT28040) in CAA01\S163 which relate solely to the provisions of S164 & S165 for ring fence trades and for expenditure incurred on or after 12 March 2008.

HMRC considers that the definition at CAA01\S161B includes removal costs.

A claim for decommissioning expenditure connected with preserving plant or machinery is not affected by whether eventually the plant or machinery is reused, demolished or partly reused and partly demolished (CAA01\S161B(2)).

Similarly, a claim for the costs of preparing plant or machinery for reuse or arranging for its reuse is not affected by whether eventually the plant or machinery is in fact reused (CAA01\S161B(3)).

The definition of decommissioning expenditure here does not include expenditure in connection with demolishing plant or machinery. Expenditure of this nature will generally be allowable under CAA01\S26.