Commentary on Sections Chapter 1: Nuclear Decommissioning Section 29: Disregard for tax purposes of cancellation etc of provisions
129.This section provides that the accounting entries made by a publicly-owned BNFL site licensee company arising from the initial recognition of the NDA taking responsibility for nuclear clean-up and decommissioning liabilities are not included in the tax computation ("a disregard"). This disregard would only apply to the initial accounting entries made on the undertaking of responsibility.
130.Without this provision the accounting credit arising in these circumstances would increase the taxable profits (or reduce the tax-allowable losses) of the BNFL company in which the credit was made. Where the NDA has taken responsibility by virtue of a direction under section 3 (thereby causing the site licensee to recognise an asset to match its liabilities) the site licensee may recognise in its accounts subsequent change in the estimated value of the NDA’s undertaking to pay for nuclear clean-up and decommissioning. The disregard will not apply to these accounting changes nor to the actual expenditure to which they relate. These subsequent changes would lead to accounting entries for the decommissioning liability and the right to recover sums from the NDA, which would match one another. This matching treatment would be followed for tax without the need for a special rule.
131.Subsections (1) and (2) define the circumstances in which the “disregard” applies. Subsection (3) sets out the disregard itself.
132.Subsection (4) ensures that it is only the accounting entries caused by the NDA acquiring responsibility for decommissioning and cleaning-up, or by the transfer of property etc to the NDA or a subsidiary of the NDA under a nuclear transfer scheme under section 39, that are to be disregarded.
133.Subsection (5) contains definitions and subsection (6) ties this section to the corporation tax legislation.