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HMRC internal manual

Oil Taxation Manual

Decommissioning and abandonment: relief for reimbursement expenditure under abandonment guarantees


CTA2010\S293 restores relief to a defaulting participator who reimburses a guarantor who has been called upon to make abandonment guarantee payments. It closely follows the equivalent PRT provision at FA91\S106.

The relief due to a defaulting participator is restricted where part of the reimbursement to the guarantor relates to part of the guarantee payment that is not applied in meeting the defaulter’s abandonment costs (CTA2010\S295). There is a formula at CTA2010\S293(4) for determining the amount of relief for the reimbursement expenditure that is allowed (see OT10400).

The relief is given in computing the defaulting participator’s ring fence income and no part of the expenditure so allowed is deductible elsewhere (CTA2010\S293(3)).

Reimbursement expenditure means expenditure incurred or consideration in money’s worth given by the relevant participator in or towards meeting the liability (CTA2010\S293(1)(c)).