674 Expenditure on abortive exploration

Summary

This section deals with certain abortive exploration expenditure not already covered by section 673.

Details

(1) Abortive exploration expenditure qualifies for a deemed mine development allowance even if the expenditure was not incurred in connection with a qualifying mine. However, abortive expenditure incurred before 1 April, 1990, which was also incurred more than 10 years before the mining trade commenced, does not qualify for a deemed mine development allowance.

(2) In order to prevent avoidance through the use of the provisions of section 675 (exploration expenditure incurred by certain bodies corporate), it is provided that where the person who incurred abortive expenditure is a body corporate, and there is a change of ownership of the body corporate, no deduction is to be allowed in respect of expenditure incurred before the date of change. Change of ownership is defined as a change within the meaning of Schedule 9 (change of ownership of company: disallowance of trading losses) but the acquisition of ordinary share capital by a Minister of the Government is to be disregarded for this purpose.

(3) A further anti-avoidance provision prevents a person who commences to work a qualifying mine in respect of which the person has not incurred the exploration expenditure (that is, a mine the person acquired from some other person) from obtaining an allowance in respect of prior abortive exploration expenditure incurred by himself.

(4) Apart from transitional relief (paragraphs 16 and 18 of Schedule 32), a double allowance will not be obtained for abortive exploration expenditure.

Relevant Date: Finance Act 2021