OT27031 - Abandonment and Decommissioning

Writing down allowances: Decommissioning expenditure

For the purposes of CAA90\s62AA (CAA\s161C and CAA01\s161D), decommissioning expenditure is defined to be expenditure in connection with:

1. preserving machinery or plant pending reuse or demolition,
2. preparing it for reuse,
3. arranging for its reuse, or
4. demolishing it.

The view of the OTO is that the definition includes removal costs.

A claim for the costs of preserving machinery or plant is not affected by whether, in the event, it is reused, demolished or partly reused and partly demolished.

Similarly, a claim for the costs of preparing and/or arranging for reuse is not affected by whether, in the event, the machinery or plant in question is in fact reused.

The legislation is at CAA90\s62AB (CAA01\s161B). CAA01\s161B does not reproduce the reference to demolishing machinery or plant found at CAA90\s62AB(1)(d) and expenditure in connection with it will generally be allowable under CAA01\s26.