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HMRC internal manual

Oil Taxation Manual

Non-Residents Working on the UK Continental Shelf: Capital Allowances - Part use of plant & machinery - Treatment of idle time

Where a mobile asset such as a rig is idle and waiting for new contracts any reduction under CAA01\S207(2) should take account of the treatment of idle time costs under OT42220 & OT42280.


In the example at OT42590 the rig was used instead for 4 months on UKCS activities, idle for 5 months, then used for 2 months in the worldwide trade before returning for the last month to UKCS activities. The HMRC view is that 2 months of the idle time costs should be attributable to the deemed permanent establishment in the UK. In arriving at the capital allowances it may be just and reasonable to allow 58.4% (4 months + 2 months + 1 month = 7 divided by 12 months) of the available writing-down allowance in year 1.