Capital Allowances Act 2001 section 166

Transfers of interests in oil fields: anti-avoidance

Section 166 prevents a buyer of plant or machinery connected with an oil field interest from claiming more qualifying expenditure than the seller's disposal value, thereby closing a potential avoidance route.

• Applies when a participator in an oil field transfers all or part of their interest, and plant or machinery (or a share in it) used or expected to be used in connection with the field passes to the new participator as part of the transfer
• Any excess of the new participator's acquisition cost over the old participator's disposal value is disregarded when calculating the new participator's available qualifying expenditure for capital allowances purposes
• The old participator's disposal value is the amount they must bring into account on disposing of the plant or machinery to the new participator
• This rule operates alongside, and does not override, the separate general anti-avoidance provisions in Chapter 17 of the Act