Corporation Tax Act 2010 section 330B

Decommissioning expenditure taken into account for PRT purposes

Section 330B provides a deduction from adjusted ring fence profits for the supplementary charge where decommissioning expenditure has reduced a participator's petroleum revenue tax liability, ensuring that the interaction between PRT relief and the supplementary charge is properly accounted for.

• Where decommissioning expenditure reduces a participator's assessable profit from an oil field and would otherwise give rise to a PRT liability, a deduction is available from adjusted ring fence profits for supplementary charge purposes, calculated as the relevant percentage of decommissioning expenditure multiplied by the appropriate fraction and the PRT difference (RP × AF × D).
• The appropriate fraction is (SC − 20%) / SC, where SC is the supplementary charge rate for the accounting period, and the PRT difference is the reduction in PRT resulting from the decommissioning expenditure being taken into account.
• When determining how much of any allowable losses are attributable to decommissioning expenditure, other types of expenditure are assumed to be used first, though a participator may elect to disapply this ordering rule if it produces an unfavourable result and specify a different order instead.
• The section does not apply for any accounting period where the supplementary charge rate is 20% or less, including any period that straddles 24 March 2011.