Income Tax (Trading and Other Income) Act 2005 section 225N

Expenditure on abandonment guarantees

Section 225N provides income tax relief for oil field participators who incur expenditure on obtaining abandonment guarantees, allowing such costs to be deducted when calculating ring fence income.

• Expenditure on obtaining an abandonment guarantee that qualifies (or would qualify) for petroleum revenue tax relief is deductible against ring fence income
• The deduction also applies where the oil field is a non-taxable field, meaning the expenditure would have qualified for petroleum revenue tax relief but for the field's non-taxable status
• The deduction is allowed to the extent that the expenditure is or would be allowable for petroleum revenue tax purposes
• Key terms such as "abandonment guarantee", "the guarantor" and "the relevant participator" take their meanings from the Finance Act 1991