Capital Allowances Act 2001 section 416ZB

Notional accounting period

Section 416ZB defines the concept of a "notional accounting period" used to determine the timing of mineral extraction allowances for site restoration expenditure incurred after a ring fence trade has ceased.

• After a ring fence trade ceases, notional accounting periods are created to provide a framework for claiming capital allowances on post-cessation site restoration spending, with each period running from the day after the trade ends (or the previous period ends) until the next termination event occurs.
• A termination event is whichever comes first: the end of 12 months from the start of the notional accounting period, the former trader's accounting date, or the end of the post-cessation period.
• The post-cessation period runs from the day after the trade ceases until the appropriate authority (the Secretary of State for offshore decommissioning, or a person specified by HMRC in other cases) confirms that site restoration is complete — no notional accounting periods can exist beyond this point.
• Where the former trader carries on multiple trades with different accounting dates and does not prepare general accounts covering all activities, the trader may choose which trade's accounting date is used; however, HMRC may override this choice if they consider it inappropriate.