Finding provisions in the Finance Act relating to the capital allowances treatment of 'cushion gas' may have caused some surprise to those not familiar with the workings of the gas storage industry. Gas does not seem to be the most likely asset to attract tax allowances more normally associated with tangible assets.
Cushion gas is the term given to the volume of gas which needs to be retained at all times in a gas-storage facility in order to enable sufficient pressure to be maintained within the facility for gas to be pumped in and out. It is not physically separated from the stored gas and so whilst in the storage facility it cannot be identified at any time; the obligation of the 'owner' is to deliver the required volume of gas to the storage facility initially and its entitlement is to remove the same volume of gas at the...
