Commentary

D7.927A Default—expenditure incurred before 17 July 2013

Corporate tax
Corporate tax | Commentary

D7.927A Default—expenditure incurred before 17 July 2013

Corporate tax | Commentary

D7.927A Default—expenditure incurred before 17 July 2013

The following provisions applied in respect to expenditure incurred before 17 July 2013 where a person had defaulted on his share of relevant decommissioning costs. These provisions were repealed by Finance Act 2013 as part of a package of measures designed to provide greater certainty in respect of decommissioning tax relief.

Defaulter's costs met by co-participator

The provisions as detailed at D7.927 apply equally where a participator has defaulted in respect of his share of the costs of abandoning an oil field before 17 July 20131.

In addition it was provided that if the default is later remedied and the defaulter reimburses the other participators the costs borne by them, then such reimbursement expenditure will be allowed as a deduction in computing the defaulter's ring fence income2 and treated as an income receipt of the recipient3. This receipt is deemed to be within the ring fence and is a receipt of either the accounting period/tax year in which it is received or, if the recipient's ring fence trade had been permanently discontinued (or the recipient ceases to be within the charge to tax)

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