Introduction Background Note
72.As announced in Autumn Statement 2013, the government is concerned about the use of bareboat charters to move significant taxable profit outside the UK tax net. Legislation was introduced alongside Finance Act 2014 to cap the amount allowed as a deduction for companies that provide drilling services or accommodation services on the UK Continental Shelf. The cap applies in respect of lease payments made on or after 1 April 2014. The measure will also ensure that the profits arising from that service are not reduced by unrelated tax relief.
73.Draft legislation was issued on 1 April 2014. The legislation which is now part of Finance Act 2014 largely follows that draft but, in addition, clarifies the definition of accommodation vessel, makes provision for expenditure within an accounting period, adopts an existing approach for the identification of extant capital expenditure and permits group payment arrangements to operate as they would have done previously. None of the changes increase the burden on the taxpayer.