Capital Allowances Act 2001 section 165C

Allowance in respect of certain services related to decommissioning

Section 165C sets out how to calculate the allowable amount (D) where expenditure under a decommissioning arrangement relates to planning or project management services provided by a connected party.

• The section applies only to planning or project management services where the cost plus method is an appropriate way to apply the arm's length principle
• The allowable amount (D) is the supplier's cost of providing the service, plus an appropriate percentage mark-up on that cost
• The mark-up is capped at the lower of the arm's length mark-up determined under the cost plus method and 10%
• Key terms used in the section take their meanings from the OECD transfer pricing guidelines as defined in section 164(4) of TIOPA 2010