§ Mr. Skeetasked the Chancellor of the Exchequer whether the Government are prepared to allow companies operating on the continental shelf to set off against tax the full cost of either the eventual removal of production platforms or their 341W transfer to other locations; and what would be the cost to the revenue of such a concession;
§ Mr. Viggersasked the Chancellor of the Exchequer if he will explain in the Official Report how the costs of abandoning offshore oil and gas platforms are treated for taxation purposes.
§ Mr. Denzil Davies, pursuant to his reply to the hon. Member for Gosport (Mr. Viggers) [Official Report, 20 February 1979; Vol. 963, c. 151–2], gave the following information:
The net cost of demolishing an offshore production platform in use for the purposes of a trade will normally rank for capital allowances for corporation tax purposes; expenses of closing down a field are allowable for PRT to the extent that the expenditure is incurred for the purposes of safety or the prevention of pollution. How far the cost of eventual removal of offshore oil and gas platforms would obtain tax relief under these provisions will depend on the facts of the particular case.
The Inland Revenue will be discussing with the industry whether the present rules are likely to give rise to serious anomalies when the expenses come to be incurred, which will not be for some years. It will report to me on the outcome of these discussions.