OT26795 | Capital Allowances: Production Sharing Contracts -Temporary Cessation of Use

Mothballing of plant and machinery under a PSC is likely to be a rare occurrence, and we would need to look at the facts in each particular case but, as a general rule, if the terms of the PSC remain unchanged and the cessation of use were only intended to be temporary, then HMRC would expect to take the view that the asset was continuing to be “held for use under the contract”, and thus continue to qualify for allowances.