TTM11330 - Offshore Activities: Capital allowances

Proportional reduction of allowances

Restriction where asset used for ‘offshore activities’ for part of accounting period

Where during an accounting period an asset used for ‘offshore activities’ is used for those activities on only some days, any writing down allowance for that period is restricted to the ‘relevant proportion’ of the full allowance. See paragraph 111(1) & (2).

Qualifying expenditure for subsequent accounting periods

Any writing down allowance for a subsequent period is calculated as if the full allowance had been given in the earlier period. See paragraph 111(3) & (4).

Calculation of ‘relevant proportion’

The relevant proportion of the full allowance to be given is calculated by:

where:

• OSD is the number of days on which the asset was used for ‘offshore activities’, and
• APD is the total number of days in the accounting period. See paragraph 111(5).

Where an asset is acquired part way through an accounting period we interpret ‘APD’ as being the total number of days from the date of acquisition to the end of the accounting period.

References