Corporation Tax Act 2010 section 290

Adjustment as a result of regional development grant

Section 290 deals with how capital allowances are adjusted in a later period when expenditure on an oil-related asset was originally covered by a regional development grant but the petroleum revenue tax position changes after the initial accounting period.

• Where a company's expenditure on an asset was met by a regional development grant and capital allowances were given in the initial period, a later change in the asset's eligibility for petroleum revenue tax relief triggers a recalculation of the allowances originally given.
• If the recalculated allowance is higher than the amount originally given, the difference is treated as new capital expenditure on an extension or addition to the asset, incurred in the later adjustment period.
• If the recalculated allowance is lower than the amount originally given, the difference is treated as trading income received by the company in the adjustment period, increasing its corporation tax liability.
• The section applies most commonly to onshore assets such as initial treatment plants for stabilising crude oil arriving by pipeline, where agreement on eligibility for petroleum revenue tax relief can take considerable time.