House of Commons portcullis
House of Commons
Session 2013 - 14
Internet Publications
Other Bills before Parliament

Finance Bill


Finance Bill
Part 2 — Oil

48

 

Decommissioning expenditure etc

86      

Decommissioning expenditure taken into account for PRT purposes

(1)   

Section 330B of CTA 2010 (decommissioning expenditure taken into account

for PRT purposes) is amended as follows.

(2)   

In subsection (1), omit the “and” at the end of paragraph (a) and after

5

paragraph (b) insert “, and

(c)   

an amount equal to the appropriate fraction of the used-up

amount of that expenditure is added under section 330A(2) in

calculating the participator’s adjusted ring fence profits for an

accounting period.”

10

(3)   

For subsection (2) substitute—

“(2)   

In calculating for the purposes of section 330(1) the amount of the

participator’s adjusted ring fence profits for the accounting period,

there is to be deducted the amount given by—equation: times[char[R],cross[char[P],times[char[A],cross[char[F],char[D]]]]]

   

where—

15

RP is the relevant percentage of the decommissioning

expenditure,

AF is the appropriate fraction, and

D is the PRT difference.”

(4)   

In subsection (3)—

20

(a)   

before the definition of “the appropriate fraction” insert—

““the relevant percentage of the decommissioning

expenditure” is the percentage of that expenditure that

is the used-up amount referred to in subsection (1)(c),”;

(b)   

in the definition of “the appropriate fraction”, omit “relevant”;

25

(c)   

in the definition of “the PRT difference”, for “subsection (1)” substitute

“subsection (1)(a)”.

(5)   

In subsection (4), for “subsection (1)” substitute “subsection (1)(a)”.

(6)   

In subsection (7)—

(a)   

omit the definition of “the relevant accounting period”, and

30

(b)   

at the end insert—

““the used-up amount”, in relation to any expenditure, has

the same meaning as in section 330A (see subsection (3)

of that section).”

(7)   

The amendments made by this section have effect in relation to expenditure

35

incurred in connection with decommissioning carried out on or after the day

on which this Act is passed.

87      

Miscellaneous amendments relating to decommissioning

(1)   

Part 1 of Schedule 29 contains provision about expenditure on and under

abandonment guarantees and abandonment expenditure.

40

 
 

Finance Bill
Part 2 — Oil

49

 

(2)   

Part 2 of Schedule 29 contains provision about calculating the profits of a ring

fence trade carried on by a person who incurs expenditure on meeting another

person’s decommissioning liabilities.

Capital allowances

88      

Expenditure on decommissioning onshore installations

5

(1)   

Section 163 of CAA 2001 (meaning of “general decommissioning expenditure”)

is amended as follows.

(2)   

In subsection (1)—

(a)   

the words after “if” become paragraph (a) of that subsection,

(b)   

in that paragraph, for “subsections (3) to (4)” substitute “subsections

10

(3), (3A) and (4)”, and

(c)   

at the end of that paragraph insert “, or

(b)   

the conditions in subsections (3B) and (4) are met.”

(3)   

After subsection (3A) insert—

“(3B)   

The expenditure must have been incurred on decommissioning plant

15

or machinery—

(a)   

which has been brought into use wholly or partly for the

purposes of a ring fence trade, and

(b)   

which—

(i)   

is, or forms part of, a relevant onshore installation, or

20

(ii)   

when last in use for the purposes of a ring fence trade,

was, or formed part of, such an installation.

(3C)   

In subsection (3B) “relevant onshore installation” means any building

or structure which—

(a)   

falls within any of sub-paragraphs (ii) to (iv) of section 3(4)(c) of

25

OTA 1975,

(b)   

is not an offshore installation, and

(c)   

is or has been used for purposes connected with the winning of

oil from an oil field any part of which lies within—

(i)   

the boundaries of the territorial sea of the United

30

Kingdom, or

(ii)   

an area designated under section 1(7) of the Continental

Shelf Act 1964.”

(4)   

In subsection (5)(a), for ““oil field” has” substitute ““oil” and “oil field” have”.

(5)   

The amendments made by this section have effect in relation to expenditure

35

incurred on decommissioning carried out on or after the day on which this Act

is passed.

89      

Expenditure on decommissioning certain redundant plant or machinery

(1)   

In section 164 of CAA 2001 (general decommissioning expenditure incurred

before cessation of ring fence trade), after subsection (1B) insert—

40

“(1C)   

If the plant or machinery concerned is incidentally-acquired redundant

plant or machinery (see subsection (1D)), it is to be regarded for the

 
 

Finance Bill
Part 2 — Oil

50

 

purposes of this section as having been brought into use for the

purposes of the ring fence trade.

(1D)   

Plant or machinery is “incidentally-acquired redundant plant or

machinery” if—

(a)   

it has not been brought into use for the purposes of the ring

5

fence trade,

(b)   

it forms part of a relevant installation (see subsection (1E))

which has been brought into use for the purposes of the ring

fence trade,

(c)   

at the time R acquired an interest in the relevant installation, the

10

plant or machinery was not being used for any purposes, and

(d)   

the acquisition of the interest in the plant or machinery was

merely incidental to the acquisition of the interest in the

relevant installation.

(1E)   

For the purposes of subsection (1D)—

15

“relevant installation” means—

(a)   

an offshore installation,

(b)   

a submarine pipeline, or

(c)   

a relevant onshore installation;

“offshore installation” and “submarine pipeline” have the same

20

meaning as in Part 4 of the Petroleum Act 1998;

“relevant onshore installation” has the meaning given by section

163(3C).”

(2)   

The amendment made by this section has effect in relation to expenditure

incurred on decommissioning carried out on or after the day on which this Act

25

is passed.

90      

Expenditure on site restoration

(1)   

Part 5 of CAA 2001 (mineral extraction allowances) is amended as follows.

(2)   

In section 395 (qualifying expenditure), in subsection (1)(d), omit “post-

trading”.

30

(3)   

In section 403 (qualifying expenditure on acquiring a mineral asset), after

subsection (2) insert—

“(2A)   

For the purposes of this section the reference to expenditure on

acquiring a mineral asset does not include expenditure incurred on the

restoration of a relevant site (within the meaning of section 416 or

35

416ZA).”

(4)   

In section 416 (expenditure on restoration within 3 years of ceasing to trade)—

(a)   

in subsections (1)(a) and (6)(a), before “mineral extraction trade” insert

“relevant”;

(b)   

in subsection (5), at the end insert—

40

   

“But it does not include decommissioning any plant or

machinery (within the meaning of section 163).”;

 
 

Finance Bill
Part 2 — Oil

51

 

(c)   

after subsection (7) insert—

“(7A)   

“Relevant mineral extraction trade” means a mineral extraction

trade that is not a ring fence trade within the meaning of Part 8

of CTA 2010 (see section 277 of that Act).”;

(d)   

the heading of section 416 becomes “Non-ring fence trades:

5

expenditure on restoration within 3 years of ceasing to trade”.

(5)   

In Chapter 5, after section 416 insert—

“416ZA  

Ring fence trades: expenditure on site restoration

(1)   

If—

(a)   

a person who is carrying on, or has ceased to carry on, a ring

10

fence trade incurs expenditure on the restoration of a relevant

site,

(b)   

that part of the restoration work to which the expenditure

relates has been carried out, and

(c)   

the expenditure has not been deducted in calculating for tax

15

purposes the profits of any trade carried on by the person,

   

the net cost of the restoration is qualifying expenditure for the relevant

period in which that part of the work to which the expenditure relates

was carried out.

(2)   

“Relevant period” means—

20

(a)   

in the case of restoration work carried out while the person is

carrying on the trade, a chargeable period, and

(b)   

in the case of restoration work carried out after the person has

ceased to carry on the trade, a notional accounting period.

   

For the meaning of “notional accounting period”, see section 416 ZB.

25

(3)   

The qualifying expenditure for a notional accounting period is treated

as incurred on the last day of trading.

(4)   

If the amount of expenditure incurred on any part of the restoration

work carried out in a relevant period is disproportionate to that part of

the restoration work, only so much of the net cost of the restoration as

30

is proportionate to that part of the restoration work (the “allowable

expenditure for the period”) is to be treated as qualifying expenditure

for that period.

(5)   

But subsection (4) does not prevent that part of the expenditure that is

not allowable expenditure for the period from being treated as

35

qualifying expenditure for a subsequent relevant period.

(6)   

If any expenditure incurred by a person is qualifying expenditure

under this section—

(a)   

the whole of the expenditure on the restoration (not just the net

cost) is not deductible in calculating the person’s income for any

40

tax purposes, and

(b)   

none of the amounts subtracted to produce the net cost is to be

treated as the person’s income for any tax purposes.

(7)   

“Restoration” includes—

(a)   

landscaping,

45

 
 

Finance Bill
Part 2 — Oil

52

 

(b)   

in relation to land in the United Kingdom, the carrying out of

any works required as a condition of granting planning

permission for development relating to the winning of oil from

an oil field,

(c)   

in relation to land in the UK marine area, the carrying out of any

5

works required in order to comply with—

(i)   

an approved abandonment programme,

(ii)   

a condition to which the approval of an abandonment

programme is subject, or

(iii)   

a requirement imposed by the Secretary of State, or an

10

agreement made with the Secretary of State, in relation

to a relevant site, and

(d)   

in relation to land in a foreign sector of the continental shelf, the

carrying out of any works required in order to comply with

anything corresponding to a matter within paragraph (c)(i), (ii)

15

or (iii) under the law of a territory outside the United Kingdom.

   

But it does not include decommissioning any plant or machinery

(within the meaning of section 163).

(8)   

A “relevant site” means—

(a)   

the site of a source to the working of which the ring fence trade

20

relates (or related), or

(b)   

land used in connection with working such a source.

(9)   

“The net cost of the restoration” means the expenditure incurred on the

restoration less any amounts that—

(a)   

are received, or are to be received, by the person, and

25

(b)   

are attributable to the restoration of the relevant site.

(10)   

All such adjustments are to be made, by way of discharge or repayment

of tax or otherwise, as are necessary to give effect to this section.

(11)   

In this section—

“abandonment programme”, “approval” and “approved” (in

30

relation to an abandonment programme) have the same

meaning as in Part 4 of the Petroleum Act 1998,

“foreign sector of the continental shelf” means an area within

which rights are exercisable with respect to the sea bed and

subsoil and their natural resources by a territory outside the

35

United Kingdom,

“oil” and “oil field” have the same meaning as in Part 1 of OTA

1975,

“ring fence trade” has the same meaning as in Part 8 of CTA 2010

(see section 277 of that Act), and

40

“UK marine area” has the meaning given by section 42 of the

Marine and Coastal Access Act 2009.

416ZB   

“Notional accounting period”

(1)   

For the purposes of section 416ZA “notional accounting period”, in

relation to a person (“the former trader”) who has ceased to carry on a

45

ring fence trade, means each of the following periods—

(a)   

the period that—

 
 

Finance Bill
Part 2 — Oil

53

 

(i)   

begins with the day following the last day on which the

former trader carried on the ring fence trade, and

(ii)   

ends with the day on which the first termination event

subsequently occurs, and

(b)   

each period that—

5

(i)   

begins with the day following the last day of a period

determined under paragraph (a) or this paragraph, and

(ii)   

ends with the day on which the first termination event

subsequently occurs.

(2)   

But there are to be no notional accounting periods after the end of the

10

post-cessation period (see subsection (4)).

(3)   

“Termination event”, in relation to a notional accounting period, means

each of the following—

(a)   

the end of the period of 12 months beginning with the first day

of the notional accounting period,

15

(b)   

the occurrence of an accounting date of the former trader or, if

there is a period for which the former trader does not make up

accounts, the end of that period (but see subsections (6) and (7)),

and

(c)   

the end of the post-cessation period.

20

(4)   

“The post-cessation period” means the period that—

(a)   

begins with the day following the last day on which the former

trader carried on the ring fence trade, and

(b)   

ends with the day on which the appropriate authority is

satisfied that the restoration of the relevant site has been

25

completed.

(5)   

In subsection (4) “the appropriate authority” means—

(a)   

in the case of restoration falling within section 416ZA(7)(c), the

Secretary of State, and

(b)   

in any other case, such person or body as the Commissioners for

30

Her Majesty’s Revenue and Customs may specify.

(6)   

If the former trader—

(a)   

carries on more than one trade,

(b)   

makes up accounts of any of them to different dates, and

(c)   

does not make up general accounts for the whole of the former

35

trader’s activities,

   

subsection (3)(b) applies with reference to the accounting date of such

one of the trades as the former trader may determine.

(7)   

If the Commissioners for Her Majesty’s Revenue and Customs are of

the opinion, on reasonable grounds, that a date determined by the

40

former trader for the purposes of subsection (6) is inappropriate, the

Commissioners may by notice direct that the accounting date of such

other of the trades referred to in that subsection as appears to the

Commissioners to be appropriate is to be used instead.

(8)   

Expressions used in this section and in section 416ZA have the same

45

meaning in this section as they do in that section.”

 
 

Finance Bill
Part 3 — Annual tax on enveloped dwellings

54

 

(6)   

In section 416B (first-year qualifying expenditure), in subsection (2), at the end

insert “(within the meaning of section 403)”.

(7)   

Part 4 of CTA 2010 (loss relief) is amended as follows.

(8)   

In section 40 (ring fence trades: extension of periods for which relief may be

given), in subsection (1)(b), for “403” substitute “by virtue of section 416ZA”.

5

(9)   

In section 43 (claim period in case of ring fence or mineral extraction trades), in

subsection (1)(b)—

(a)   

after “416” insert “or 416ZA”, and

(b)   

for the words from “restoration” to “trade” substitute “site restoration”.

(10)   

The amendments made by this section have effect in relation to expenditure

10

incurred on restoration carried out on or after the day on which this Act is

passed.

91      

Restrictions on allowances for certain oil-related expenditure

   

Schedule 30 contains provision in connection with restrictions on allowances

for certain oil-related expenditure.

15

Part 3

Annual tax on enveloped dwellings

The charge to tax

92      

Charge to tax

(1)   

A tax (called “annual tax on enveloped dwellings”) is to be charged in

20

accordance with this Part.

(2)   

Tax is charged in respect of a chargeable interest if on one or more days in a

chargeable period—

(a)   

the interest is a single-dwelling interest and has a taxable value of more

than £2 million, and

25

(b)   

a company, partnership or collective investment scheme meets the

ownership condition with respect to the interest.

(3)   

The tax is charged for the chargeable period concerned.

(4)   

A company meets the ownership condition with respect to a single-dwelling

interest on any day on which the company is entitled to the interest (otherwise

30

than as a member of a partnership or for the purposes of a collective

investment scheme).

(5)   

A partnership meets the ownership condition with respect to a single-dwelling

interest on any day on which a member of the partnership that is a company is

entitled to the interest (as a member of the partnership).

35

(6)   

A collective investment scheme meets the ownership condition with respect to

a single-dwelling interest on any day on which the interest is held for the

purposes of the scheme.

(7)   

If a company is jointly entitled to a chargeable interest (as a member of a

partnership or otherwise), then regardless of whether the company is entitled

40

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2013
Revised 25 June 2013