|
| |
|
(3) | Subsections (4) to (9) apply for the purposes of this section and |
| |
| |
(4) | References to providing a service include— |
| |
(a) | letting a ship on charter or any other asset on hire, and |
| |
(b) | providing goods which are to be used up in the course of |
| 5 |
| |
(5) | “Decommissioning expenditure” means expenditure in connection |
| |
| |
(6) | “Decommissioning” means— |
| |
(a) | demolishing plant or machinery, |
| 10 |
(b) | preserving plant or machinery pending its reuse or |
| |
| |
(c) | preparing plant or machinery for reuse, or |
| |
(d) | arranging for the reuse of plant or machinery. |
| |
(7) | It is immaterial for the purposes of subsection (6)(b) whether the |
| 15 |
plant or machinery is reused, is demolished or is partly reused and |
| |
| |
(8) | It is immaterial for the purposes of subsection (6)(c) and (d) whether |
| |
the plant or machinery is in fact reused. |
| |
(9) | References to R’s expenditure under the arrangement are to so much |
| 20 |
of the consideration for the service as is decommissioning |
| |
expenditure incurred by R. |
| |
165B | Restriction on allowance available |
| |
(1) | The amount, if any, by which R’s expenditure under the |
| |
arrangement exceeds D is to be left out of account in determining R’s |
| 25 |
available qualifying expenditure. |
| |
(2) | D is the cost to S of providing the service or, if R’s expenditure under |
| |
the arrangement relates to only part of the service, that part. |
| |
(3) | Subsection (2) is subject to sections 165C and 165D, which provide |
| |
for D to be calculated differently in certain circumstances. |
| 30 |
(4) | But if, under any arrangement, a particular service or part of a |
| |
service is provided by more than one person who is connected with |
| |
R (so that without this subsection there would be more than one |
| |
amount for D in relation to that service or part), D is the lowest of |
| |
| 35 |
165C | Allowance in respect of certain services related to decommissioning |
| |
(1) | This section applies to so much of R’s expenditure under the |
| |
arrangement as relates to the supply by S of a service if— |
| |
(a) | the service is a planning or project management service, and |
| |
(b) | the cost plus method is an appropriate method of applying |
| 40 |
the arm’s length principle to the provision of it. |
| |
| |
|
| |
|
| |
|
(a) | the cost to S of providing the service or, if R’s expenditure |
| |
under the arrangement relates to only part of the service, that |
| |
| |
(b) | the appropriate percentage of that amount. |
| |
(3) | The appropriate percentage is the smaller of— |
| 5 |
(a) | the appropriate mark up determined in accordance with the |
| |
| |
| |
(4) | Any expression which is used in this section and in the transfer |
| |
pricing guidelines has the meaning given in those guidelines. |
| 10 |
| “The transfer pricing guidelines” has the meaning given by section |
| |
| |
165D | Allowance where decommissioning undertaken for other |
| |
participators in oil field |
| |
(1) | This section applies where— |
| 15 |
(a) | S decommissions the plant or machinery, |
| |
(b) | there are, in addition to R, one or more other participators in |
| |
| |
(c) | the expenditure incurred in respect of the decommissioning |
| |
is apportioned between the participators (including R) in |
| 20 |
accordance with their shares in the oil won from the relevant |
| |
field or their shares in the equity of that field. |
| |
(2) | D is the part of the expenditure referred to in subsection (1)(c) which |
| |
| |
| 25 |
(a) | plant or machinery is or has been used in connection with the |
| |
winning of oil from more than one relevant field, and |
| |
(b) | the expenditure incurred in respect of the decommissioning |
| |
is apportioned between those fields in accordance with the |
| |
contribution from each field to the total of the oil won using |
| 30 |
| |
| subsections (1) and (2) apply to each such field as if subsection (1)(c) |
| |
referred to the expenditure apportioned to that field. |
| |
(4) | But subsections (2) and (3) do not apply (and section 165B(2) applies |
| |
| 35 |
(a) | the amount of consideration, or the method of determining |
| |
the amount of consideration, to be received by S under the |
| |
arrangement or arrangements, or |
| |
(b) | the apportionment of the liability for that consideration |
| |
(whether between the participators as mentioned in |
| 40 |
subsection (1)(c) or between the fields as mentioned in |
| |
| |
| has been agreed as, or as part of, an avoidance scheme. |
| |
(5) | A scheme is an “avoidance scheme” if the main purpose, or one of the |
| |
main purposes, of a party in entering into the scheme is to enable a |
| 45 |
person to obtain a tax advantage under this Part that would not |
| |
| |
|
| |
|
| |
|
(6) | The reference in subsection (5) to obtaining a tax advantage that |
| |
would not otherwise be obtained includes obtaining an allowance |
| |
that is in any way more favourable to a person than the one that |
| |
would otherwise be obtained. |
| |
| 5 |
“licensee”, “oil” and “oil field” have the same meaning as in Part |
| |
| |
“other participator” means a person, not connected with R, who |
| |
is a licensee in respect of any licensed area wholly or partly |
| |
included in the oil field in question, and |
| 10 |
“relevant field” means an oil field— |
| |
(a) | in which plant or machinery is located, or |
| |
(b) | in connection with which the plant or machinery is |
| |
being or has been used for the purposes of a ring fence |
| |
| 15 |
165E | Transaction to obtain tax advantage |
| |
(1) | Allowances under this Part are restricted under subsection (5) if— |
| |
(a) | a person (“R”) who is carrying on, or has ceased to carry on, |
| |
a ring fence trade enters into a transaction with another |
| |
| 20 |
(b) | S receives from R consideration for services provided in |
| |
pursuance of the transaction, |
| |
(c) | all or part of that consideration is decommissioning |
| |
| |
(d) | the transaction either has an avoidance purpose, or is part of, |
| 25 |
or occurs as a result of, a scheme or arrangement that has an |
| |
| |
(2) | Subsection (1)(d) may be satisfied— |
| |
(a) | whether the scheme or arrangement was made before or after |
| |
the transaction was entered into, and |
| 30 |
(b) | whether or not the scheme or arrangement is legally |
| |
| |
(3) | A transaction, scheme or arrangement has an “avoidance purpose” if |
| |
the main purpose, or one of the main purposes, of a party in— |
| |
(a) | entering into the transaction, scheme or arrangement, or |
| 35 |
(b) | agreeing an amount of consideration, or a method of |
| |
determining an amount of consideration, to be paid in |
| |
pursuance of the transaction, scheme or arrangement, |
| |
| is to enable a person to obtain a tax advantage under this Part that |
| |
would not otherwise be obtained. |
| 40 |
(4) | The reference in subsection (3) to obtaining a tax advantage that |
| |
would not otherwise be obtained includes obtaining an allowance |
| |
that is in any way more favourable to a person than the one that |
| |
would otherwise be obtained. |
| |
(5) | All or part of R’s expenditure under the transaction is to be left out |
| 45 |
of account in determining R’s available qualifying expenditure. |
| |
(6) | The amount of expenditure to be left out of account is— |
| |
|
| |
|
| |
|
(a) | such amount as would or would in effect cancel out the tax |
| |
advantage mentioned in subsection (3) (whether that |
| |
advantage is obtained by R or another person and whether it |
| |
relates to the transaction or something else), or |
| |
(b) | if the amount found under paragraph (a) exceeds the whole |
| 5 |
of R’s expenditure under the transaction, the whole of that |
| |
| |
3 | In section 26(5), at the end insert “and sections 165A to 165E (restrictions on |
| |
allowances: anti-avoidance).” |
| |
4 | In section 57(3), after the reference to section 70DA insert— |
| 10 |
“sections 165A to 165E (restrictions on allowances: anti- |
| |
| |
5 | In section 161C(3), for “and 164(4)” substitute “, 164(4) and 165A to 165E”. |
| |
6 | In section 164(5A), at the end insert “and sections 165A to 165E.” |
| |
7 | After section 165(3) insert— |
| 15 |
“(3A) | Subsection (3) is subject to sections 165A to 165E.” |
| |
8 | The amendments made by this Part have effect in relation to expenditure |
| |
incurred on decommissioning carried out on or after the day on which this |
| |
| |
| 20 |
Expenditure on site restoration |
| |
9 | After section 416ZB of CAA 2001 (inserted by section 89) insert— |
| |
“416ZC | Site restoration services supplied by connected person |
| |
| |
(a) | a person (“R”) who is carrying on, or has ceased to carry on, |
| 25 |
a ring fence trade enters into an arrangement, |
| |
(b) | under the arrangement, a person (“S”) who is connected with |
| |
R provides a service to R in connection with work on the |
| |
restoration of a relevant site, and |
| |
(c) | (in the absence of this section) all or part of the consideration |
| 30 |
for the service would be qualifying expenditure of R under |
| |
| |
| the amount of the expenditure which is qualifying expenditure is |
| |
restricted under section 416ZD(1). |
| |
(2) | Subsection (1)(b) may be satisfied whether the service is provided to |
| 35 |
R directly or indirectly; and in particular it does not matter— |
| |
(a) | whether R and S are parties to the same contract, or |
| |
(b) | whether payments are made by R directly to S. |
| |
(3) | Subsections (4) and (5) apply for the purposes of this section and |
| |
sections 416ZD and 416ZE. |
| 40 |
(4) | “Relevant site” has the meaning given by section 416ZA(8). |
| |
(5) | References to providing a service include— |
| |
|
| |
|
| |
|
(a) | letting a ship on charter or any other asset on hire, and |
| |
(b) | providing goods which are to be used up in the course of |
| |
| |
416ZD | Restriction on allowance available |
| |
(1) | In determining how much of the consideration for the service is |
| 5 |
qualifying expenditure, there is to be left out of account the amount |
| |
(if any) by which that consideration exceeds D. |
| |
(2) | D is the cost to S of providing the service or, if the qualifying |
| |
expenditure relates to only part of the service, that part. |
| |
(3) | Subsection (2) is subject to— |
| 10 |
| |
| |
| which provide for D to be calculated differently in certain |
| |
| |
(4) | The following provisions apply in relation to an amount restricted |
| 15 |
under subsection (1) as they apply in relation to an amount restricted |
| |
| |
| |
(b) | section 165E, subject to the modifications in subsection (5). |
| |
(5) | The modifications are that— |
| 20 |
(a) | the references to Part 2 are to be read as references to this Part, |
| |
(b) | in subsection (1)(c), the reference to decommissioning |
| |
expenditure is to be read as a reference to qualifying |
| |
expenditure under section 416ZA, and |
| |
(c) | in subsection (5), the reference to R’s available qualifying |
| 25 |
expenditure is to be read as a reference to R’s qualifying |
| |
expenditure on the restoration of the site. |
| |
(6) | But if, under the arrangement, a particular service or part of a service |
| |
is provided by more than one person who is connected with R (so |
| |
that without this subsection there would be more than one amount |
| 30 |
for D in relation to that service or part), D is the lowest of those |
| |
| |
416ZE | Allowance where site restoration undertaken for other participators |
| |
| |
(1) | This section applies where— |
| 35 |
(a) | S carries out the restoration of a relevant site, |
| |
(b) | there are, in addition to R, one or more other participators in |
| |
| |
(c) | the expenditure incurred in carrying out the restoration is |
| |
apportioned between the participators (including R) in |
| 40 |
accordance with their shares in the oil won from the relevant |
| |
field or their shares in the equity of that field. |
| |
(2) | D is the part of the expenditure referred to in subsection (1)(c) which |
| |
| |
| 45 |
|
| |
|
| |
|
(a) | a relevant site has been used in connection with the winning |
| |
of oil from more than one relevant field, and |
| |
(b) | the expenditure incurred in respect of the restoration is |
| |
apportioned between those fields in accordance with the |
| |
contribution from each field to the total of the oil won using |
| 5 |
| |
| subsections (1) and (2) apply to each such field as if subsection (1)(c) |
| |
referred to the expenditure apportioned to that field. |
| |
(4) | But subsections (2) and (3) do not apply (and section 416ZD(2) |
| |
| 10 |
(a) | the amount of consideration, or the method of determining |
| |
the amount of consideration, to be received by S under the |
| |
arrangement or arrangements, or |
| |
(b) | the apportionment of the liability for that consideration |
| |
(whether between the participators as mentioned in |
| 15 |
subsection (1)(c) or between the fields as mentioned in |
| |
| |
| has been agreed as, or as part of, an avoidance scheme. |
| |
(5) | A scheme is an “avoidance scheme” if the main purpose, or one of the |
| |
main purposes, of a party in entering into the scheme is to enable a |
| 20 |
person to obtain a tax advantage under this Part that would not |
| |
| |
(6) | The reference in subsection (5) to obtaining a tax advantage that |
| |
would not otherwise be obtained includes obtaining an allowance |
| |
that is in any way more favourable to a person than the one that |
| 25 |
would otherwise be obtained. |
| |
(7) | In relation to the restoration of a relevant site, “relevant field” means |
| |
| |
(a) | the oil field in which the site is located; |
| |
(b) | if the site is the site of a source to the working of which a ring |
| 30 |
fence trade relates (or related), an oil field from which oil is or |
| |
has been won by means of working the source; |
| |
(c) | if the site is land used in connection with working such a |
| |
source, an oil field from which oil is or has been won by |
| |
means of working the source. |
| 35 |
| |
“licensee”, “oil” and “oil field” have the same meaning as in Part |
| |
| |
“other participator” means a person, not connected with R, who |
| |
is a licensee in respect of any licensed area wholly or partly |
| 40 |
included in the oil field in question.” |
| |
10 | In section 395(3) of that Act (provisions limiting “qualifying expenditure”) |
| |
for “Chapter 4 contains” substitute “Chapters 4 and 5 contain”. |
| |
11 | The amendments made by this Part have effect in relation to expenditure |
| |
incurred on restoration carried out on or after the day on which this Act is |
| 45 |
| |
|
| |
|
| |
|
| |
| |
12 | Part 4 of TIOPA 2010 (transfer pricing) is amended as follows. |
| |
13 | In section 147(6) (list of exceptions to the basic rule stated in that section), |
| |
after paragraph (b) insert— |
| 5 |
“(ba) | section 206A (modification of basic rule where allowances |
| |
restricted for certain oil-related expenditure),”. |
| |
14 | After section 206 insert— |
| |
“206A | Modification of basic rule where allowances restricted for certain |
| |
| 10 |
(1) | This section applies where— |
| |
(a) | in a case to which section 165A(1) of CAA 2001 (restriction of |
| |
allowances for decommissioning expenditure) applies, R’s |
| |
available qualifying expenditure is restricted under section |
| |
165B(2) or 165C of that Act, or |
| 15 |
(b) | in a case to which section 416ZC(1) of that Act (restriction of |
| |
allowances for expenditure on site restoration) applies, R’s |
| |
qualifying expenditure is restricted under section 416ZD(2) |
| |
or section 165C as applied by section 416ZD(4)(a) of that Act. |
| |
(2) | In calculating for tax purposes S’s profits and losses in relation to the |
| 20 |
service provided by S to R, the amount which S is required to bring |
| |
into account is an amount equal to R’s expenditure (restricted as |
| |
mentioned in subsection (1)(a) or (b)). |
| |
(3) | Section 147(3) and (5) do not apply to the extent that they are |
| |
inconsistent with subsection (2). |
| 25 |
(4) | In this section “R” and “S” have the meaning given by section 165A |
| |
or 416ZC of CAA 2001 (as the case may be).” |
| |
15 | In section 213 (effect of Part 4 on capital allowances), after subsection (2) |
| |
| |
“(3) | But a claim under section 174 may not be made if the claim would |
| 30 |
affect the operation of sections 165A to 165E or 416ZC to 416ZE of |
| |
| |
16 | The amendments made by this Part have effect for accounting periods |
| |
ending on or after the day on which this Act is passed. |
| |
|
| |
|