Corporation Tax Act 2010 section 294

Payment under abandonment guarantee not immediately applied

Section 294 deals with situations where a guarantor makes payments into a fund and those fund assets are later used to meet decommissioning costs, rather than the costs being paid directly.

• This section applies when a guarantor pays money into a fund rather than directly covering decommissioning expenditure.
• The fund assets are subsequently applied to meet the actual costs of decommissioning oil and gas infrastructure.
• Tax relief is not available at the point the guarantor pays into the fund, but only when the fund's assets are eventually used to cover the decommissioning expenditure.
• When the expenditure is finally met from the fund, the normal relief rules for abandonment expenditure (under sections 292 or 293) apply at that later point.