Capital Allowances Act 2001 Schedule 3 paragraph 87

Restrictions on qualifying expenditure in case of UK oil licence and certain other assets inapplicable for expenditure pre-16th July 1985

Paragraph 87 provides transitional relief from certain restrictions on qualifying expenditure for second-hand mineral assets in the UK, where the buyer's expenditure arises under a contract entered into before 16th July 1985.

• Where a UK mineral asset is acquired under a contract entered into before 16th July 1985, the normal restrictions on qualifying expenditure for second-hand assets (sections 407, 410 and 411) do not apply, meaning the buyer's allowances are not capped by the seller's historical costs or unrelieved expenditure.
• Even where the pre-July 1985 exemption does not apply, sections 407 and 411 are modified so that references to an earlier owner of a UK mineral asset exclude anyone who last owned it on or before 31st March 1986, effectively disregarding very early ownership history.
• A mineral asset that consists of or includes an interest in or right over mineral deposits or land is only treated as situated in the UK if the underlying deposits or land are themselves located in the UK.
• All terminology used in this paragraph carries the same meaning as in Chapter 4 of Part 5 of the Act, which deals with qualifying expenditure on second-hand assets for mineral extraction allowances.