OT21566 | Investment Allowance: Expenditure incurred before a field is determined

CTA10\S332CA

When a company incurs investment expenditure before a field is determined, it would not normally be relievable investment expenditure as defined at CTA10\S332C, because it would not have been incurred in relation to a qualifying oil field (defined at CTA10\S332B). CTA10\S332CA applies to allow expenditure to be treated as relievable investment expenditure in certain circumstances, even when it is incurred before the field is determined.

In order for s332CA to apply, four conditions must be met:

• The expenditure must be incurred in respect of a particular area

• That area must not have been determined as an oil field under Schedule 1 to the Oil Taxation Act 1975 (OTA 1975) at the time the expenditure was incurred.

• The area must subsequently be determined as an oil field undert that Schedule, and

• The company that incurred the expenditure must be a licensee in that oil field.

The expenditure is then treated as if it were incurred at the time the area is determined to be an oil field under Schedule 1 to the OTA 1975.