Finance (No. 4) Bill (HC Bill 325)

Section 183

SCHEDULE 21 Relief in respect of decommissioning expenditure

Restriction of relief available in respect of decommissioning expenditure

1 Part 8 of CTA 2010 (oil activities) is amended as follows.

2 5In section 330 (supplementary charge in respect of ring fence trades), at the
end of subsection (2) insert—

“See also sections 330A and 330B (which provide for the amount of
adjusted ring fence profits to be further adjusted where
decommissioning expenditure has been taken into account).”

3 10After section 330 insert—

“330A Decommissioning expenditure taken into account in calculating ring
fence profits

(1) This section applies where—

(a) any decommissioning expenditure is taken into account in
15calculating the amount mentioned in paragraph (a) of
subsection (3) of section 330 or the amount mentioned in
paragraph (b) of that subsection, and

(b) if that expenditure were not so taken into account, the
amount of the adjusted ring fence profits of the company for
20the accounting period would be greater than nil.

(2) In calculating for the purposes of section 330(1) the amount of the
adjusted ring fence profits of the company for the accounting period,
there is to be added an amount equal to the appropriate fraction of
the used-up amount of that expenditure.

(3) 25For the purposes of this section—

• “the appropriate fraction” is

  
  
  

  —

  where SC is the percentage specified in section 330(1) for the
  30accounting period, and

• “the used-up amount”, in relation to any expenditure, is the
  difference between—

  (a)

  the adjusted ring fence profits of the company for the
  accounting period determined in the absence of this
  35section (which may be nil), and

  (b)

  what the adjusted ring fence profits of the company
  for that accounting period would be if that
  expenditure were not taken into account as
  mentioned in subsection (1).

(4) 40In determining for the purposes of this section whether, and to what
extent, any losses which have been taken into account as mentioned
in subsection (1) are attributable to decommissioning expenditure—

(a) assume that any amounts of any other expenditure which
could be taken into account in calculating those losses are

taken into account before any amounts of decommissioning
expenditure, and

(b) where any losses have been surrendered in accordance with
Part 5, the company must specify, in accordance with a basis
5determined jointly by the company, the surrendering
company (if different) and any other claimant company,
whether any of those losses is attributable to
decommissioning expenditure.

(5) But if paragraph (a) of subsection (4) would work unfavourably in
10the company’s case, the company may elect for that paragraph not to
apply in relation to it and for any amounts of expenditure which
could be taken into account in calculating those losses instead to be
taken into account in the order specified in the election.

(6) In determining for the purposes of this section the used-up amount
15of decommissioning expenditure, assume that any other amounts
that could be deducted in calculating the adjusted ring fence profits
of the company for the accounting period have already been so
deducted.

(7) But if subsection (6) would work unfavourably in the company’s
20case, the company may elect for that subsection not to apply in
relation to it and for any amounts that could be deducted in
calculating those adjusted ring fence profits instead to be deducted
in the order specified in the election.

(8) For the purposes of this section, any deduction made under section
25330B is to be disregarded.

(9) This section does not apply in relation to any accounting period for
which the percentage specified in section 330(1) is less than or equal
to 20% (including any accounting period beginning before 24 March
2011 and ending on or after that date).

(10) 30In this section—

• “claimant company” and “surrendering company” are to be
  read in accordance with Part 5 (see section 188), and

• “decommissioning expenditure” has the meaning given by
  section 330C.

330B 35Decommissioning expenditure taken into account for PRT purposes

(1) This section applies where—

(a) any decommissioning expenditure is taken into account in
calculating the assessable profit accruing to a participator in
any chargeable period from an oil field, and

(b) 40if that expenditure were not so taken into account, the
amount of petroleum revenue tax with which the participator
would be chargeable in respect of the field for the chargeable
period would be greater than nil.

(2) In calculating for the purposes of section 330(1) the amount of the
45participator’s adjusted ring fence profits for the relevant accounting
period, there is to be deducted an amount equal to the appropriate
fraction of the PRT difference.

(3) For the purposes of this section—

Finance (No. 4) BillPage 522

• “the appropriate fraction” is

  
  
  

  where SC is the percentage specified in section 330(1) for the
  relevant accounting period, and

• 5“the PRT difference” is the difference between—

  (a)

  the amount of petroleum revenue tax with which the
  participator is chargeable for the chargeable period
  (which may be nil), and

  (b)

  the amount of petroleum revenue tax with which the
  10participator would be chargeable for that chargeable
  period if the decommissioning expenditure were not
  taken into account as mentioned in subsection (1).

(4) In determining for the purposes of this section whether, and to what
extent, any allowable losses which have been taken into account as
15mentioned in subsection (1) are attributable to decommissioning
expenditure, assume that any amounts of any other expenditure
which could be taken into account in calculating those losses are
taken into account before any amounts of decommissioning
expenditure.

(5) 20But if subsection (4) would work unfavourably in the participator’s
case, the participator may elect for that subsection not to apply in
relation to it and for any amounts of expenditure which could be
taken into account in calculating those losses instead to be taken into
account in the order specified in the election.

(6) 25This section does not apply in relation to any accounting period for
which the percentage specified in section 330(1) is less than or equal
to 20% (including any accounting period beginning before 24 March
2011 and ending on or after that date).

(7) In this section—

• 30“assessable profit” and “allowable loss” have the same meaning
  as in Part 1 of OTA 1975 (see section 2 of that Act),

• “decommissioning expenditure” has the meaning given by
  section 330C, and

• “the relevant accounting period”—

  (a)

  35in a case where section 301 applies, is to be construed
  in accordance with subsection (7) of that section, and

  (b)

  in any other case, means the accounting period for
  which a deduction in respect of any petroleum
  revenue tax with which the participator may be
  40chargeable for the chargeable period mentioned in
  subsection (1) would be made under section 299(2)
  (deduction of PRT in calculating income for
  corporation tax purposes).

330C Meaning of “decommissioning expenditure”

(1) 45In sections 330A and 330B “decommissioning expenditure” means
expenditure incurred in connection with—

(a) demolishing any plant or machinery,

(b) preserving any plant or machinery pending its reuse or
demolition,

(c) preparing any plant or machinery for reuse,

(d) arranging for the reuse of any plant or machinery, or

(e) 5the restoration of any land.

(2) It is immaterial for the purposes of subsection (1)(b) whether the
plant or machinery is reused, is demolished or is partly reused and
partly demolished.

(3) It is immaterial for the purposes of subsection (1)(c) and (d) whether
10the plant or machinery is in fact reused.

(4) In subsection (1)(e) “restoration” includes landscaping.

(5) The Treasury may by order amend this section.

(6) An order under subsection (5) may include transitional provision
and savings.”

4 15In section 7 of FA 2011 (increase in rate of supplementary charge), in
subsection (6), at the end insert—

“See also sections 330A and 330B of CTA 2010 (which have effect in
relation to the separate accounting period consisting of so much of
the straddling period as falls on or after 24 March 2011).”

20Extension of loss relief available in respect of decommissioning expenditure

(1) In Chapter 2 of Part 4 of CTA 2010 (relief for trade losses), section 40 (ring
fence trades: extension of periods for which relief may be given) is amended
as follows.

(2) In subsection (1)(b), for the words from “for which” to the end substitute “for
25which any allowances under section 164 or 403 of CAA 2001 are made to the
company in respect of decommissioning expenditure”.

(3) In subsection (3)—

(a) for “the allowance” substitute “the sum of the allowances”, and

(b) for “that allowance” substitute “that amount”.

(4) 30After that subsection insert—

“(3A) In this section “decommissioning expenditure” has the meaning
given by section 330C.”

Application

(1) The amendments made by this Schedule have effect in relation to
35expenditure incurred in connection with decommissioning carried out on or
after 21 March 2012.

(2) In sub-paragraph (1) “decommissioning” means anything falling within any
of paragraphs (a) to (e) of section 330C(1) of CTA 2010 (as inserted by this
Schedule).

Section 184

SCHEDULE 22 Reduction of supplementary charge for certain oil fields

Amendments of Chapter 7 of Part 8 of CTA 2010

1 In Part 8 of CTA 2010 (oil activities), Chapter 7 (reduction of supplementary
5charge for certain new oil fields) is amended as follows.

2 In section 334 (company’s pool of field allowances), for “new oil fields”
substitute “eligible oil fields”.

(1) Section 337 (initial licensee to hold a field allowance) is amended as follows.

(2) In subsection (1)—

(a) 10for “an initial licensee in a new oil field” substitute “a licensee in an
additionally-developed oil field or a new oil field (an “eligible oil
field”) on the authorisation day”, and

(b) at the end insert “(and accordingly may hold more than one field
allowance for the field at the same time)”.

(3) 15In subsection (2), omit “initial”.

(4) The heading of that section becomes “Licensee to hold field allowance”.

4 In section 338 (holding a field allowance on acquisition of equity share), for
“a new oil field” substitute “an eligible oil field”.

5 In section 339 (unactivated amount of field allowance), in subsections (1)
20and (3), for “a new oil field” substitute “an eligible oil field”.

(1) Section 340 (introduction to section 341) is amended as follows.

(2) In subsection (1), for “a new oil field” substitute “an eligible oil field”.

(3) In subsection (5), for “the new oil field” substitute “the field”.

(1) Section 341 (activation of field allowance) is amended as follows.

(2) 25In subsection (1), for “the new oil field” substitute “the eligible oil field”.

(3) After subsection (3) insert—

“(4) Subsection (5) applies for the purpose of determining the amount of
a company’s field allowance for an eligible oil field (“the relevant
field allowance”) to be activated in a case where—

(a) 30the company holds one or more other field allowances for the
field, and

(b) at the time when the company began to hold the relevant
field allowance, the company already held one or more of
those other field allowances (an “earlier field allowance”).

(5) 35The amount of the company’s relevant income from the field in the
accounting period is to be reduced (but not to below nil) by the
amount of any earlier field allowance activated in respect of the
accounting period.

(6) In a case where the company began to hold two or more field
40allowances at the same time, the company may determine the order

in which the company is to be regarded for the purposes of this
section as having begun to hold them.”

8 In section 342 (introduction to sections 343 and 344), in subsections (1) and
(6), for “a new oil field” substitute “an eligible oil field”.

9 5In section 343 (reference periods), in subsection (3), for “the new oil field”
substitute “the eligible oil field”.

(1) Section 344 (activation of field allowance) is amended as follows.

(2) In subsection (1), for “the new oil field” substitute “the eligible oil field”.

(3) In subsection (4), for “the new oil field” substitute “the field”.

(4) 10After that subsection insert—

“(5) Subsection (6) applies for the purpose of determining the amount of
a company’s field allowance for an eligible oil field (“the relevant
field allowance”) to be activated in a case where—

(a) the company holds one or more other field allowances for the
15field, and

(b) at the time when the company began to hold the relevant
field allowance, the company already held one or more of
those other field allowances (an “earlier field allowance”).

(6) The amount of the company’s relevant income from the field in the
20reference period is to be reduced (but not to below nil) by the amount
of any earlier field allowance activated in respect of the reference
period.

(7) In a case where the company began to hold two or more field
allowances at the same time, the company may determine the order
25in which the company is to be regarded for the purposes of this
section as having begun to hold them.”

(1) Section 345 (introduction to sections 346 and 347) is amended as follows.

(2) In subsection (2)—

(a) for “a new oil field” substitute “an eligible oil field”, and

(b) 30for “the new oil field” substitute “the field”.

(3) In subsections (3) and (4), for “the new oil field” substitute “the field”.

(4) In subsection (6), for “a new oil field” substitute “an eligible oil field”.

(1) Section 346 (reduction of field allowance if equity disposed of) is amended
as follows.

(2) 35In subsection (1), for “the new oil field” (in the first place it occurs) substitute
“the eligible oil field”.

(3) In the definitions of “E1” and “E2”, for “the new oil field” substitute “the
field”.

(1) Section 347 (acquisition of field allowance if equity acquired) is amended as
40follows.

(2) In subsection (1), for “the new oil field” substitute “the eligible oil field”.

(3) In subsection (2)—

(a) for “the new oil field” (in the first place it occurs) substitute “the
eligible oil field”, and

(b) for “the new oil field” (in the second place it occurs) substitute “the
field”.

(4) 5In subsection (4), for “the new oil field” substitute “the field”.

(1) Section 349 (orders) is amended as follows.

(2) In subsection (1), before “qualifying oil fields” insert “additionally-
developed oil fields or”.

(3) In subsection (2), for “new oil field” (in both places) substitute “eligible oil
10field”.

(4) After subsection (2) insert—

“(2A) The Commissioners for Her Majesty’s Revenue and Customs may by
order make provision about the meaning of any term used in this
Chapter.”

(5) 15For subsection (3) substitute—

“(3) The provision that may be made by an order under this section
includes—

(a) provision amending this Chapter,

(b) provision that has effect in relation to times before the order
20is made and does not increase any person’s liability to tax,
and

(c) incidental, supplemental, consequential, transitional or
saving provision, including provision amending, repealing
or revoking any provision made by or under this Act.”

15 25Before section 350 insert—

“349A Additionally-developed oil field”

(1) In this Chapter an oil field is an “additionally-developed oil field”
if—

(a) a national authority has authorised a project described in an
30addendum to the consent for development for the oil field,
and

(b) the project meets such conditions as may be specified in an
order made by the Commissioners for Her Majesty’s
Revenue and Customs.

(2) 35In this section—

• “consent for development”, in relation to an oil field, does not
  include consent which is limited to the purpose of testing the
  characteristics of an oil-bearing area,

• “development”, in relation to an oil field, means winning oil
  40from the field otherwise than in the course of searching for oil
  or drilling wells, and

• “national authority” means—

  (a)

  the Secretary of State, or

  (b)

  a Northern Ireland department.

(3) An order under this section may include provision having effect in
relation to times before it is made, provided that it does not increase
any person’s liability to tax.

(4) No order may be made under this section unless a draft of the
5statutory instrument containing it has been laid before and approved
by a resolution of the House of Commons.”

(1) Section 357 (other definitions) is amended as follows.

(2) For the definition of “authorisation day” substitute—

• ““authorisation day” means—

  (a)

  10in relation to an additionally-developed oil field, the
  day when the project mentioned in section 349A(1) is
  authorised, and

  (b)

  in relation to a new oil field, the day when
  development of the field is authorised as mentioned
  15in section 350(1)(b),”.

(3) After that definition insert—

• ““eligible oil field” means an oil field which is an additionally-
  developed oil field or a new oil field,”.

(4) Omit the definition of “initial licensee”.

(5) 20In the definition of “relevant income”, for “a new oil field” substitute “an
eligible oil field”.

17 The heading of the Chapter becomes “REDUCTION OF SUPPLEMENTARY
CHARGE FOR ELIGIBLE OIL FIELDS”.

Consequential amendments

(1) 25Part 8 of CTA 2010 (oil activities) is amended as follows.

(2) In section 270 (overview of Part)—

(a) in subsection (7), for “certain new oil fields” substitute “eligible oil
fields”, and

(b) in subsection (8), for paragraph (c) substitute—

“(c) 30eligible oil field”, see section 357.”

(3) In section 330 (supplementary charge in respect of ring fence trades), in
subsection (5), for “certain new oil fields” substitute “eligible oil fields”.

(1) Schedule 4 to CTA 2010 (index of defined expressions) is amended as
follows.

(2) 35At the appropriate place insert—

(3) Omit the entry relating to “initial licensee (in Chapter 7 of Part 8)”.

20 In section 63 of FA 2011 (reduction of supplementary charge for new oil
fields), omit subsection (3).

Commencement

(1) 45The amendments made by paragraphs 14, 15 and 16(3) come into force on
the day on which this Act is passed.

(2) The other amendments made by this Schedule come into force in accordance
with provision contained in an order made by the Treasury.

(3) An order made under sub-paragraph (2) may—

(a) 50make different provision for different purposes;

(b) provide for such amendments to have effect in relation to times
before the order is made.

(1) The Commissioners for Her Majesty’s Revenue and Customs may by order
make any incidental, supplemental, consequential, transitional or saving
55provision in consequence of the amendments made by this Schedule.

(2) An order under this paragraph may—

(a) amend, repeal or revoke any provision made by or under CTA 2010;

(b) include provision having effect in relation to times before it is made,
provided that it does not increase any person’s liability to tax.

Section 189

60SCHEDULE 23 Air passenger duty

Part 1 Northern Ireland long haul rates of duty from 1 November 2011 to 31 March
2012

1 65In section 30 of FA 1994 (air passenger duty: rates of duty) after subsection
(4A) insert—

“(4B) Subsection (4C) applies if—

(a) the passenger’s journey is a relevant Northern Ireland
journey, and

(b) 70apart from subsection (4C), subsection (2) would not apply to
the journey.

(4C) The applicable rate in subsection (2) applies to the journey instead of
the applicable rate in subsection (3), (4) or (4A) (as the case may be).

(4D) A passenger’s journey is a “relevant Northern Ireland journey”—

(a) 75in the case of a journey which has only one flight, if the flight
begins in Northern Ireland, and

(b) in any other case, if the first flight of the journey—

(i) begins in Northern Ireland, and

(ii) is not followed by a connected flight beginning at a
place in the United Kingdom or a territory specified
in Part 1 of Schedule 5A.”

2 In article 3 of the Air Passenger Duty (Connected Flights) Order 1994 (S.I.
51994/1821) for “section 30(6), or section 31(3),” substitute “Chapter 4 of Part
1”.

3 The amendments made by this Part of this Schedule have effect in relation
to the carriage of passengers beginning on or after 1 November 2011 but
before 1 April 2012.

10Part 2 Rates of duty from 1 April 2012

(1) Section 30 of FA 1994 (air passenger duty: rates of duty) is amended as
follows.

(2) In subsection (2)—

(a) 15in paragraph (a) for “£12” substitute “£13”, and

(b) in paragraph (b) for “£24” substitute “£26”.

(3) In subsection (3)—

(a) in paragraph (a) for “£60” substitute “£65”, and

(b) in paragraph (b) for “£120” substitute “£130”.

(4) 20In subsection (4)—

(a) in paragraph (a) for “£75” substitute “£81”, and

(b) in paragraph (b) for “£150” substitute “£162”.

(5) In subsection (4A)—

(a) in paragraph (a) for “£85” substitute “£92”, and

(b) 25in paragraph (b) for “£170” substitute “£184”.

(6) After subsection (4A) insert—

“(4B) Subsection (4C) applies if—

(a) the passenger’s journey is a relevant Northern Ireland
journey, and

(b) 30apart from subsection (4C), subsection (2) would not apply to
the journey.

(4C) The applicable rate in subsection (2) applies to the journey instead of
the applicable rate in subsection (3), (4) or (4A) (as the case may be).

(4D) A passenger’s journey is a “relevant Northern Ireland journey”—

(a) 35in the case of a journey which has only one flight, if the flight
begins in Northern Ireland, and

(b) in any other case, if the first flight of the journey—

(i) begins in Northern Ireland, and

(ii) is not followed by a connected flight beginning at a
40place in the United Kingdom or a territory specified
in Part 1 of Schedule 5A.”

5 In article 3 of the Air Passenger Duty (Connected Flights) Order 1994 (S.I.
1994/1821) for “section 30(6), or section 31(3),” substitute “Chapter 4 of Part
1”.

6 The amendments made by this Part of this Schedule have effect in relation
5to the carriage of passengers beginning on or after 1 April 2012.

Part 3 Devolution of Northern Ireland long haul rates of duty

7 Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.

(1) Section 30 (rates of duty) is amended as follows.

(2) 10After subsection (1) insert—

“(1A) Subsection (1) does not apply to the carriage of a chargeable
passenger to which section 30A below (Northern Ireland long haul
rates of duty) applies.”

(3) Omit subsections (4B) to (4D) (as inserted by paragraph 4(6) above).

(4) 15The amendments made by this paragraph have effect in relation to the
carriage of passengers beginning on or after the relevant day as defined in
section 30A of FA 1994 (as inserted by paragraph 9 below).

9 After section 30 insert—

“30A Northern Ireland long haul rates of duty

(1) 20This section applies to the carriage of a chargeable passenger if—

(a) the carriage begins on or after the relevant day,

(b) the only flight, or the first flight, of the passenger’s journey
begins at a place in Northern Ireland,

(c) the passenger’s journey does not end at a place in the United
25Kingdom or a territory specified in Part 1 of Schedule 5A, and

(d) if the passenger’s journey has more than one flight, the first
flight is not followed by a connected flight beginning at a
place in the United Kingdom or a territory specified in Part 1
of Schedule 5A.

(2) 30Air passenger duty is chargeable on the carriage of the chargeable
passenger at the rate determined as follows.

(3) If the passenger’s journey ends at a place in a territory specified in
Part 2 of Schedule 5A—

(a) if the passenger’s agreement for carriage provides for
35standard class travel in relation to every flight on the
passenger’s journey, the rate is the rate set by an Act of the
Northern Ireland Assembly for the purposes of this
paragraph, and

(b) in any other case, the rate is the rate set by an Act of the
40Northern Ireland Assembly for the purposes of this
paragraph.

(4) If the passenger’s journey ends at a place in a territory specified in
Part 3 of Schedule 5A—