Finance Bill

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Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 32 — Restrictions on allowances for certain oil-related expenditure
Part 1 — Decommissioning expenditure
401

165D
Allowance where decommissioning undertaken for other
participators in oil field
(1)
This section applies where—
(a)
S decommissions the plant or machinery,
(b)
there are, in addition to R, one or more other participators in
5
the relevant field, and
(c)
the expenditure incurred in respect of the decommissioning
is apportioned between the participators (including R) in
accordance with their shares in the oil won from the relevant
field or their shares in the equity of that field.
10
(2)
D is the part of the expenditure referred to in subsection (1)(c) which
is incurred by R.
(3)
Where—
(a)
plant or machinery is or has been used in connection with the
winning of oil from more than one relevant field, and
15
(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
that plant or machinery,

subsections (1) and (2) apply to each such field as if subsection (1)(c)
20
referred to the expenditure apportioned to that field.
(4)
But subsections (2) and (3) do not apply (and section 165B(2) applies
instead) if—
(a)
the amount of consideration, or the method of determining
the amount of consideration, to be received by S under the
25
arrangement or arrangements, or
(b)
the apportionment of the liability for that consideration
(whether between the participators as mentioned in
subsection (1)(c) or between the fields as mentioned in
subsection (3)(b)),
30

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
person to obtain a tax advantage under this Part that would not
otherwise be obtained.
35
(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.
(7)
In this section—
40
“licensee”, “oil” and “oil field” have the same meaning as in Part
1 of OTA 1975,
“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
45
“relevant field” means an oil field—
(a)
in which plant or machinery is located, or

Finance Bill
Schedule 32 — Restrictions on allowances for certain oil-related expenditure
Part 1 — Decommissioning expenditure
402

(b)
in connection with which the plant or machinery is
being or has been used for the purposes of a ring fence
trade.
165E
Transaction to obtain tax advantage
(1)
Allowances under this Part are restricted under subsection (5) if—
5
(a)
a person (“R”) who is carrying on, or has ceased to carry on,
a ring fence trade enters into a transaction with another
person (“S”),
(b)
S receives from R consideration for services provided in
pursuance of the transaction,
10
(c)
all or part of that consideration is decommissioning
expenditure, and
(d)
the transaction either has an avoidance purpose, or is part of,
or occurs as a result of, a scheme or arrangement that has an
avoidance purpose.
15
(2)
Subsection (1)(d) may be satisfied—
(a)
whether the scheme or arrangement was made before or after
the transaction was entered into, and
(b)
whether or not the scheme or arrangement is legally
enforceable.
20
(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
(b)
agreeing an amount of consideration, or a method of
determining an amount of consideration, to be paid in
25
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.
(4)
The reference in subsection (3) to obtaining a tax advantage that
would not otherwise be obtained includes obtaining an allowance
30
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
of account in determining R’s available qualifying expenditure.
(6)
The amount of expenditure to be left out of account is—
35
(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
40
of R’s expenditure under the transaction, the whole of that
expenditure.”
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—
45
“sections 165A to 165E (restrictions on allowances: anti-
avoidance);”.

Finance Bill
Schedule 32 — Restrictions on allowances for certain oil-related expenditure
Part 2 — Expenditure on site restoration
403

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—
“(3A)
Subsection (3) is subject to sections 165A to 165E.”
8
The amendments made by this Part have effect in relation to expenditure
5
incurred on decommissioning carried out on or after the day on which this
Act is passed.
Part 2
Expenditure on site restoration
9
After section 416ZB of CAA 2001 (inserted by section 92) insert—
10
“416ZC
Site restoration services supplied by connected person
(1)
Where—
(a)
a person (“R”) who is carrying on, or has ceased to carry on,
a ring fence trade enters into an arrangement,
(b)
under the arrangement, a person (“S”) who is connected with
15
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
for the service would be qualifying expenditure of R under
section 416ZA,
20

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
R directly or indirectly; and in particular it does not matter—
(a)
whether R and S are parties to the same contract, or
25
(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.
(4)
“Relevant site” has the meaning given by section 416ZA(8).
(5)
References to providing a service include—
30
(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
providing a service.
416ZD
Restriction on allowance available
(1)
In determining how much of the consideration for the service is
35
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—
40
(a)
subsection (4), and

Finance Bill
Schedule 32 — Restrictions on allowances for certain oil-related expenditure
Part 2 — Expenditure on site restoration
404

(b)
section 416ZE,

which provide for D to be calculated differently in certain
circumstances.
(4)
The following provisions apply in relation to an amount restricted
under subsection (1) as they apply in relation to an amount restricted
5
under section 165B(1)—
(a)
section 165C;
(b)
section 165E, subject to the modifications in subsection (5).
(5)
The modifications are that—
(a)
the references to Part 2 are to be read as references to this Part,
10
(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
expenditure is to be read as a reference to R’s qualifying
15
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
for D in relation to that service or part), D is the lowest of those
20
amounts.
416ZE
Allowance where site restoration undertaken for other participators
in oil field
(1)
This section applies where—
(a)
S carries out the restoration of a relevant site,
25
(b)
there are, in addition to R, one or more other participators in
the relevant field, and
(c)
the expenditure incurred in carrying out the restoration is
apportioned between the participators (including R) in
accordance with their shares in the oil won from the relevant
30
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
is incurred by R.
(3)
Where—
(a)
a relevant site has been used in connection with the winning
35
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
that site,
40

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)
applies instead) if—
(a)
the amount of consideration, or the method of determining
45
the amount of consideration, to be received by S under the
arrangement or arrangements, or

Finance Bill
Schedule 32 — Restrictions on allowances for certain oil-related expenditure
Part 3 — Amendments of TIOPA 2010
405

(b)
the apportionment of the liability for that consideration
(whether between the participators as mentioned in
subsection (1)(c) or between the fields as mentioned in
subsection (3)(b)),

has been agreed as, or as part of, an avoidance scheme.
5
(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
person to obtain a tax advantage under this Part that would not
otherwise be obtained.
(6)
The reference in subsection (5) to obtaining a tax advantage that
10
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.
(7)
In relation to the restoration of a relevant site, “relevant field” means
any of the following—
15
(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
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
20
source, an oil field from which oil is or has been won by
means of working the source.
(8)
In this section—
“licensee”, “oil” and “oil field” have the same meaning as in Part
1 of OTA 1975, and
25
“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.”
10
In section 395(3) of that Act (provisions limiting “qualifying expenditure”)
for “Chapter 4 contains” substitute “Chapters 4 and 5 contain”.
30
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
passed.
Part 3
Amendments of TIOPA 2010
35
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—
“(ba)
section 206A (modification of basic rule where allowances
restricted for certain oil-related expenditure),”.
40
14
After section 206 insert—
“206A
Modification of basic rule where allowances restricted for certain
expenditure
(1)
This section applies where—

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 1 — Returns
406

(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
(b)
in a case to which section 416ZC(1) of that Act (restriction of
5
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
service provided by S to R, the amount which S is required to bring
10
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).
(4)
In this section “R” and “S” have the meaning given by section 165A
15
or 416ZC of CAA 2001 (as the case may be).”
15
In section 213 (effect of Part 4 on capital allowances), after subsection (2)
insert—
“(3)
But a claim under section 174 may not be made if the claim would
affect the operation of sections 165A to 165E or 416ZC to 416ZE of
20
CAA 2001.”
16
The amendments made by this Part have effect for accounting periods
ending on or after the day on which this Act is passed.
Schedule 33
Section 162

Annual tax on enveloped dwellings: returns, enquiries, assessments and
25
appeals
Part 1
Returns
Contents of return
1     (1)
The Commissioners for Her Majesty’s Revenue and Customs may by
30
regulations make provision about—
(a)
the form and content of a return;
(b)
the method of delivering a return.
      (2)
Regulations under sub-paragraph (1) may make different provision for
different purposes.
35
      (3)
Every return must include a declaration by the person making it to the effect
that the return is correct and complete to the best of the person’s knowledge.
      (4)
A return is treated as containing any information provided by the person
making the return for the purpose of completing the return.
2
In this Part of this Act—
40

Finance Bill
Schedule 33 — Annual tax on enveloped dwellings: returns, enquiries, assessments and appeals
Part 1 — Returns
407

(a)
references to the delivery of an annual tax on enveloped dwellings
return are to the delivery of a return that complies with all
requirements imposed by or under any of sections 159 and 161 and
paragraph 1;
(b)
references to the delivery of a return of the adjusted chargeable
5
amount are to the delivery of a return that complies with all
requirements imposed by or under any of sections 160 and 161 and
paragraph 1.
Amendment of return by chargeable person
3     (1)
A person who has delivered a return may amend the return by notice to an
10
officer of Revenue and Customs.
      (2)
The Commissioners for Her Majesty’s Revenue and Customs may require
that notices under this paragraph—
(a)
are in a specified form, or
(b)
contain specified information.
15
      (3)
An amendment under this paragraph must be made by the end of the next
chargeable period after the chargeable period to which the return relates
(but see the exception that follows).
      (4)
If a return is delivered on or after 1 January in the chargeable period next
after that to which it relates, the latest time for amending the return under
20
this paragraph is the end of the period of 3 months after the day on which
the return is delivered.
Correction of return by HMRC
4     (1)
An officer of Revenue and Customs may correct any obvious error or
omission in a return.
25
      (2)
A correction under this paragraph—
(a)
is made by notice to the chargeable person, and
(b)
is regarded as effecting an amendment of the return.
      (3)
The reference in sub-paragraph (1) to an error includes, for instance, an
arithmetical mistake or an error of principle.
30
      (4)
A correction under this paragraph must be made within the 9 months
beginning with—
(a)
the day on which the return was delivered, or
(b)
if the correction is needed as a result of an amendment under
paragraph 3, the day on which the amendment was made.
35
      (5)
A correction under this paragraph has no effect if the chargeable person—
(a)
amends the return so as to reject the correction, or
(b)
gives a notice rejecting the correction in the special period mentioned
in sub-paragraph (6).
      (6)
A notice is given in the “special period” if it is given—
40
(a)
after the end of the period within which the chargeable person may
amend the return, but
(b)
before the end of the 3 months beginning with the date of issue of the
notice of correction.