Schedule 21 - First-year allowances for expenditure wholly for a ring fence trade
Finance Bill
5:30 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
I beg to move amendment No. 109, in page 252, line 4, at end insert—
'First-year allowances on mothballing costs
6A.—(1) Omit section 161C(2) and insert—
''(2) The decommissioning expenditure is to be treated as first-year qualifying expenditure under section 45F above.''.
(2) Omit section 163(2)(b) and insert—
''(b) on decommissioning plant and machinery which has been brought into use for the purposes of a ring fence trade.''.
(3) In section 163(3), leave out ''The'' and insert ''Where the plant and machinery forms part of an offshore installation or a submarine pipeline, the''
(4) In section 163(5), after ''1998'' insert ''except that an offshore installation partly in relevant waters and partly not shall not be excluded from the definition of offshore installation for these purposes only.''.'.
The amendment touches on a subject raised briefly this morning, when the Financial Secretary gave a response on which I would be grateful for further elucidation. The comments on capital allowances apply equally to the amendment and the cost of mothballing platforms. The decommissioning of infrastructure related to oilfields and the decommissioning of trans-median field installations part of which lie outside UK territorial waters, are currently excluded from the change to grant 100 per cent. first-year allowances. The Financial Secretary commented that her understanding was that mothballing did fall within the allowances. There is also an issue of onshore versus offshore. Surely it is anomalous that such types of expenditure should be excluded from the general change of the capital allowance system. Mothballing extends the life of a field when shutting down would terminate it; logic would suggest that all mothballing should qualify for the capital allowances.