Corporation Tax Act 2010 section 295

Amounts excluded from section 293(1)

Section 295 restricts the tax relief available under the oil decommissioning provisions where amounts contributed to a decommissioning fund are repaid to a guarantor rather than being used to meet actual decommissioning costs.

• Where a guarantor has contributed funds in connection with oil field decommissioning obligations, those contributions may qualify for tax relief under section 293(1).
• However, if amounts are repaid to the guarantor instead of being applied towards meeting the actual decommissioning expenditure, the tax relief is restricted accordingly.
• This prevents relief being claimed on contributions that ultimately do not fund decommissioning work, ensuring that the tax benefit only attaches to amounts genuinely used for their intended purpose.
• A parallel income tax rule exists for individuals and unincorporated businesses under section 225Q of the Income Tax (Trading and Other Income) Act 2005.