Taxes Consolidation Act 1997 section 695

Abandonment expenditure: allowances and loss relief

Section 695 provides a 100% deduction for abandonment expenditure incurred in relation to a petroleum field, together with a three-year carry-back of losses attributable to such expenditure and a carry-forward of unused relief to a new petroleum trade.

• A 100% allowance is given for abandonment expenditure incurred by a person who has carried on petroleum extraction activities in a relevant field, provided the expenditure is not met by another person
• Abandonment losses may be carried back against petroleum income of the three preceding chargeable periods, with priority given to later periods before earlier ones
• Unrelieved abandonment losses remaining on permanent cessation of a petroleum trade may be carried forward and deducted in the first chargeable period of a new petroleum trade carried on by the same person
• Abandonment expenditure incurred after a petroleum trade has permanently ceased is treated as incurred on the last day of trading, and the resulting loss may then be carried back under the normal rules