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HMRC internal manual

Oil Taxation Manual

Decommissioning and abandonment: decommissioning security agreements: tax treatment of sums paid into the trust

On first principles payments into the trust are not allowable for tax purposes. The payments are made in order to meet future decommissioning costs and as such are capital in nature, and not allowable in computing profits for tax purposes.

The contributions are capital in the trustees’ hands are so are not taxable on the trustees.