OT26236 - Capital Allowances: Mineral Extraction Allowance

Expenditure Incurred Before and After End Stage 3 1967 Memorandum

There is a distinction between on the one hand the cost of searching for, discovering and testing new petroleum deposits, and, on the other hand, considering competing economic appraisal and development plans. Both may be incurred before the end of Stage 3 of the 1967 Memorandum. The former costs are eligible for relief as scientific research/research and development. The latter costs are not. See OT26017. Expenditure in the latter category which may include such costs as pre-development engineering, feasibility and field development studies, work in connection with a field development plan etc, is normally treated as MEA relievable at 25%.

Expenditure incurred after the end of Stage 3 may include capital expenditure on a field which is not plant or machinery and/or relieved under other codes.