OT26045 - Capital Allowances: Research and Development Allowances: The purchase of the results of past exploration work
CAA01\S439
Qualifying expenditure is defined at CAA01\S439(1) as capital expenditure incurred by a person on research & development (R&D) directly undertaken by him or on his behalf.
RDA will therefore not be available to the purchaser of the results of past exploration work. The expenditure will either not have been undertaken on behalf of the purchaser or the purchaser is not incurring the expenditure for the purpose of the extension of knowledge.
HMRC takes the view that R&D expenditure incurred by an operator on behalf of a consortium under a joint operating agreement is undertaken on behalf of all the parties. It is not seen as necessary that all the parties have an interest in the licence concerned. In contrast where a licence interest changes hands, the original R&D expenditure was not undertaken on behalf of the purchaser of the interest and RDA will not be available to the purchaser. Such 바카라 사이트渟econd hand exploration expenditure바카라 사이트� may however be relieved under the MEA code.
HMRC takes a similar view with payments under 바카라 사이트渂ottom hole바카라 사이트� agreements. This is an agreement where a non-licensee makes a payment to the licensees for information regarding the results of drilling an exploration well. These payments are usually made when the drilling reaches 바카라 사이트渢otal depth바카라 사이트�. If the agreement is made before drilling commences HMRC accepts that the R&D expenditure is incurred on behalf of the 바카라 사이트渂ottom hole바카라 사이트� contributor. If the agreement is not made until after the well is completed HMRC does not accept that the R&D expenditure is incurred on behalf of the 바카라 사이트渂ottom hole바카라 사이트� contributor. The payment may qualify for MEA.
In all cases it should be noted that the provisions in CAA01\S439(2) mean that RDA is not available on the same expenditure in respect of more than one trade.
The meaning of the term 바카라 사이트渦ndertaken by him or on his behalf바카라 사이트� was considered in the case of Gaspet Ltd v Elliss 60TC91. The case considered the meaning of the expressions 바카라 사이트渄irectly바카라 사이트�, 바카라 사이트渦ndertaken바카라 사이트� and 바카라 사이트渙n behalf of바카라 사이트�.