Finance Act, 1992
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Abandonment expenditure: allowances and loss relief. |
86.—(1) In this section “abandonment losses” means so much of a loss in a petroleum trade incurred by a person in a chargeable period as does not exceed the total amount of allowances which— | |
(a) fall to be made to him for that chargeable period under this section, and (b) have been brought into account in determining the amount of the said loss in the petroleum trade. | ||
(2) Subject to subsections (5) to (9), where in a chargeable period a person, who is or has been carrying on, in relation to a relevant field or a part of it, petroleum extraction activities other than effecting the initial treatment and storage of petroleum that is won from the relevant field, incurs abandonment expenditure (not being expenditure which has been or is to be met directly or indirectly by any other person) in relation to the field or the part of it, as the case may be, there shall be made to him for the chargeable period an allowance equal to the amount of the expenditure. | ||
(3) As respects so much of a loss in a petroleum trade incurred by a person in a chargeable period as is an abandonment loss— | ||
(a) the person shall be entitled, on making a claim in that behalf, to such repayment of income tax as is necessary to secure that the aggregate amount of income tax for the chargeable period and the three chargeable periods last preceding it will not exceed the amount which would have been borne by him if his income arising from petroleum activities for each of those chargeable periods had been reduced by the lesser of— | ||
(i) the abandonment loss, or | ||
(ii) so much of the abandonment loss as could not, on that claim, be treated as reducing such income of a later chargeable period: | ||
Provided that relief under this paragraph in respect of a loss shall be deemed for all the purposes of the Tax Acts to be relief given under subsection (1) of section 307 of the Income Tax Act, 1967 , such that— | ||
(I) no further relief shall be given under subsection (1) of the said section 307 in respect of so much of an abandonment loss as is an amount in respect of which relief has been given under this paragraph, and | ||
(II) subsections (2) to (6) of section 307 , and section 318 , of the Income Tax Act, 1967 , shall apply to relief under this paragraph as they apply to relief under the said section 307, | ||
and | ||
(b) subsections (2) and (3) of section 16 of the Corporation Tax Act, 1976 , shall have effect as if the time specified in the said subsection (3) were a period of three years ending immediately before the chargeable period in which the loss is incurred. | ||
(4) So much of the abandonment losses, if any, incurred by a person on or before the day on which he permanently discontinues to carry on a petroleum trade (hereafter in this subsection referred to as “the first-mentioned trade”) as would not, apart from this subsection, be allowed against, or treated as reducing, his or any other person's income or profits, shall be treated as incurred by him in the first chargeable period of the first petroleum trade (hereafter in this section referred to as “the new trade”) to be carried on by him after the permanent discontinuance of the first-mentioned trade as a trading expense of the new trade. | ||
(5) Where a petroleum trade carried on by a person has been permanently discontinued, then any abandonment expenditure incurred by the person after the discontinuance shall be treated for the purposes of subsection (2) as if it had been incurred by him on the last day on which he carries on the petroleum trade. | ||
(6) For the purposes of this section, save for the purposes of subsections (4) and (5), the day on which any expenditure is incurred shall be taken to be the day on which the sum in question becomes payable. | ||
(7) Any allowance made to a person under this section shall be made to him in taxing his petroleum trade but such allowance shall not be made in respect of the same expenditure in taxing more than one trade. | ||
(8) References in Parts XIII to XVI of the Income Tax Act, 1967 , and in section 22 of the Finance Act, 1971 , to capital expenditure shall be deemed not to include references to expenditure which is abandonment expenditure: | ||
Provided that section 303 and subsection (5) of section 304 of the Income Tax Act, 1967 , shall, with any necessary modifications, apply for the purposes of this section as they apply for the purposes of Part XVI of that Act. | ||
(9) Subsections (9), (10), (11) and (15) of section 84 shall apply for the purposes of this section as they apply for the purposes of that section. |