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D7.925 General decommissioning expenditure

Specific rules give more effective tax relief for expenditure incurred in decommissioning offshore oil fields. Broadly, these rules permit relief at 100% for the following expenditure¹:

1. Ìý

   •ÌýÌýÌýÌý the net demolition cost of plant and machinery (that is, after deducting any receipts from the sale of scrap etc), and

2. Ìý

   •ÌýÌýÌýÌý other decommissioning costs, such as costs incurred on preparation for reuse and also the costs of removing and mothballing oil installations where their eventual fate has not been decided.

The rules also allow for an increased ability to carry back losses to previous periods. Without those provisions, these costs would be treated as expenditure qualifying for writing down allowances and balancing allowances and as the trade may by then have become unprofitable, it may have been impossible to obtain effective relief for such expenditure.