Oil Taxation Act 1983 section Schedule 1 paragraph 3

Expenditure on non-mobile assets no longer used in the principal field

Schedule 1, paragraph 3 deals with the tax treatment of expenditure a participator incurs on enhancing or maintaining a non-mobile asset that was previously used in their oil field but is no longer being used in that field, particularly where the asset generates tariff receipts or is being prepared for disposal.

• Where a participator spends money improving a non-mobile qualifying asset that was previously used in their principal oil field but is no longer in use there, special rules apply if the asset generates tariff income or is being readied for sale.
• For tax relief purposes, the use of such an asset to generate tariff receipts is treated as if it were still being used in connection with the principal field, preserving the participator's ability to claim expenditure relief.
• If the asset has generated tax-exempt tariff receipts at any time in the six years before the expenditure was incurred, the amount of expenditure that qualifies as being incurred with a view to disposal is reduced using a formula borrowed from section 7A of the Act.
• References to use in connection with the principal field include use that would count as such but for the exempt gas provisions, ensuring that assets used for exempt gas are not excluded from these rules.