Capital Allowances Act 2001 section 163A

Expenditure in anticipation of approval of abandonment programme

Section 163A sets out the time limit and conditions under which expenditure incurred in anticipation of a decommissioning approval can retain its status as general decommissioning expenditure for capital allowances purposes.

• Expenditure incurred in anticipation of decommissioning approval is treated as never having been general decommissioning expenditure unless a qualifying condition is met within five years of the end of the accounting period in which the expenditure was incurred
• The first qualifying condition (Condition A) is that an abandonment programme is approved and that programme (or a condition of its approval) authorises or requires the decommissioning of the relevant plant or machinery
• The second qualifying condition (Condition B) is that, before an abandonment programme is approved, the Secretary of State imposes a condition or enters into an agreement that authorises or requires the decommissioning of the relevant plant or machinery
• If the expenditure loses its status as general decommissioning expenditure, all necessary tax assessments and adjustments must be made, and affected persons must notify HMRC within three months of becoming aware of any resulting inaccuracy in a return