OT27046 - Abandonment and Decommissioning

Defaulter's Abandonment expenditure met by other participators

FA91\s64 closely follows the relief given for PRT under FA91\s107 and provides relief for the other participators who meet the abandonment expenditure of a defaulting participator.

Where a participator in a joint operating, unitisation or related agreement defaults, the defaulting participator’s interest will normally be forfeited and, subject to the agreement of the Secretary of State, taken over by some of or all the other participators. Abandonment expenditure incurred before forfeiture will be in respect of assets still in the ownership of the defaulter. Thus one of the conditions for relief for Capital Allowances under CAA90\s62, CAA90\s62A and CAA90\s62AA (CAA01\s26, CAA01\164 and CAA01\s161C) will not be met – the costs will have been incurred for the purposes of the defaulter’s trade not that of the participator paying them.

FA91\s64 provides that the non-defaulting participator meeting the expenditure will get the same relief by way of capital allowances or, exceptionally, a revenue deduction as would have been available to the defaulter if the defaulter had met it.

For abandonment expenditure in respect of a defaulting participator’s share incurred after forfeiture, relief will in principle be available under the normal capital allowances sections without the need to invoke FA91\s64.