Finance Act, 1992

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Exploration expenditure incurred by certain companies.

85.—(1) For the purposes of section 84 , where exploration expenditure (not being expenditure which has been or is to be met directly or indirectly by any other person) is incurred by a company (hereafter in this section referred to as an “exploration company”) and—

(a) another company is a wholly-owned subsidiary of the exploration company, or

(b) the exploration company is, at the time the exploration expenditure is incurred, a wholly-owned subsidiary of another company (hereafter in this section referred to as “the parent company”), then, the expenditure, or so much of it as the exploration company specifies—

(i) in the case referred to in paragraph (a), may at the election of the exploration company be deemed to have been incurred by such other company (being a wholly-owned subsidiary of the exploration company) as the exploration company specifies, and

(ii) in the case referred to in paragraph (b), may at the election of the exploration company be deemed to have been incurred by the parent company or by such other company (being a wholly-owned subsidiary of the parent company) as the exploration company specifies.

(2) Where, under subsection (1), exploration expenditure incurred by an exploration company is deemed to have been incurred by another company (hereafter in this subsection referred to as “the other company”)—

(a) the expenditure shall be deemed to have been incurred by the other company at the time at which it was actually incurred by the exploration company,

(b) in a case where the expenditure was incurred at a time prior to the incorporation of the other company, that company shall be deemed to have been in existence at the time the expenditure was incurred, and

(c) in the application of section 84 to a petroleum trade carried on by the other company, the expenditure shall be deemed—

(i) to have been incurred by the other company for the purposes of that trade, and

(ii) not to have been met directly or indirectly by the exploration company.

(3) The same expenditure shall not be taken into account in relation to more than one trade by virtue of this section.

(4) A deduction or allowance shall not be made in respect of the same expenditure both by virtue of this section and under some other provision of the Tax Acts.

(5) A company shall, for the purposes of subsection (1), be deemed to be a wholly-owned subsidiary of another company if and so long as all of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies, and paragraph 6 of the Fifth Schedule to the Finance Act, 1973 , shall have effect for the purposes of supplementing this subsection as if the references therein to section 39 of, and the said Schedule to, that Act were a reference to this subsection.