Capital Allowances Act 2001 section 416ZD

Restriction on allowance available

Section 416ZD restricts the amount of qualifying expenditure that can be claimed for site restoration services where those services are supplied by a connected person, by capping the allowable amount at the actual cost of providing the service.

• When a connected person provides site restoration services, any consideration paid that exceeds the actual cost of providing the service (known as "D") is excluded from qualifying expenditure.
• If the qualifying expenditure relates to only part of the service, D is limited to the cost of providing that specific part rather than the whole service.
• Where the same service or part of a service is provided by more than one connected person, D is set at the lowest cost among those providers.
• Anti-avoidance rules that apply to restricted decommissioning allowances under Part 2 also apply here, with appropriate modifications so that references align with mineral extraction allowances and site restoration expenditure.