OT27047 - Abandonment and Decommissioning

Reimbursement by defaulter

Where a defaulter wholly or partly reimburses a participator for payments met by that participator because of the payer’s previous default, FA91\s65 provides that the amount concerned is allowed as a deduction in computing the payer’s ring fence income and treated as income of the recipient’s ring fence trade for the relevant accounting period.

The relevant accounting period is that in which reimbursement is received or the last accounting period of the ring fence trade if it has been discontinued.

FA91\s65 closely follows the form of the equivalent PRT relief at FA91\s108.

Note that the payment does not affect capital allowances in any way and that relief is restricted to the amount of the payment on which relief under FA91\s64 ( OT27046) fell due.