Expenditure on sinking a mine shaft (see Coltness Iron Company v
Black 1TC287 and
BIM62045), or deepening such a shaft
(see Bonner v Basset Mines Ltd 6TC146 and
BIM62050), is capital expenditure of a
mineral extraction trade and therefore not an allowable deduction
in computing the taxable profits of that trade.
However, if the source is worked, mineral extraction
allowances can be claimed for such expenditure under CAA01/Part 5
(see CA50100 onwards).
Where the minerals lie in pockets or seams exploration work
to locate further minerals may be allowed, whether successful or
not, as long as the mine continues to be worked by means of the
original shaft. This includes expenditure on trial borings from the
surface or by drifts from the workings.
However, where such borings or drifts result in the sinking
of a further shaft the exploration expenditure, as well as the
expense of sinking the shaft, is not allowable (see
BIM62005).
The expense of work undertaken to recover a lost seam, in the
case of a mine worked in faulty ground, is allowable as long as the
mine continues to be worked by means of the original shaft.
