Достижения и вызовы ОБСЕ к юбилею Хельсинского Заключительного акта (1975) и Саммита в Астане (2010)
A tax, to be known as petroleum revenue tax, shall be charged in accordance with this Part of this Act in respect of profits from oil won under the authority of a licence granted under either Part I of the Petroleum Act 1998 or the Petroleum (Production) Act (Northern Ireland) 1964; and in this Part of this Act “oil” means any substance so won or capable of being so won other than methane gas won in the course of operations for making and keeping mines safe.
For each oil field which is a taxable field the tax shall, in the case of each participator, be charged at the rate of 0 per cent. on the assessable profit accruing to him in any chargeable period from that field, as reduced under section 7 of this Act by any allowable losses and under section 8 of this Act by reference to his share, if any, of the oil allowance for that period, subject however to the limit imposed in his case by section 9 of this Act.
In relation to any oil field—
the first chargeable period is the period ending at the end of the critical half year (including an unlimited time prior to the beginning of that half year); and
each subsequent half year is a chargeable period.
In this section—
" relevantly appropriated ", in relation to oil won from an oil field, means appropriated to refining or to any use except use for production purposes, and " relevant appropriation " shall be construed accordingly ;
A claim for the allowance, in connection with an oil field,
“designated area” means an area designated by Order in Council under section 1(7) of the Continental Shelf Act 1964;
Schedule 1 to this Act shall have effect with respect to the determination of oil fields, and Schedule 2 to this Act shall have effect with respect to the management and collection of the tax; and this Part of this Act shall have effect subject to the further provisions in Schedule 3 to this Act and, in connection with certain gas sold to the British Gas Corporation, to section 10 of this Act.
For the purposes of the tax the assessable profit or allowable loss accruing to a participator in any chargeable period from an oil field shall be computed in accordance with the following provisions of this section.
The assessable profit or allowable loss so accruing in the period is the difference (if any) between the sum of the positive amounts for the period and the sum of the negative amounts for the period; and that difference (if any) is an assessable profit if the sum of the positive amounts is greater than the sum of the negative amounts, and is otherwise an allowable loss.
For the period—
the positive amounts for the purposes of this section are the following (as defined in this section), namely the gross profit (if any) accruing to the participator in the period, his licence credit (if any) for the period, and any amount to be credited to him for the period in respect of expenditure; and
the negative amounts for those purposes are the following (as so defined) namely the gross loss (if any) so accruing, his licence debit (if any) for the period, and any amount to be debited to him for the period in respect of expenditure.
For the purposes of the tax (including advance petroleum revenue tax) the gross profit or loss (if any) accruing to the participator in the period is the difference (if any) between—
the aggregate of the amounts mentioned in subsection (5) below; and
one-half of the market value, on the last business day of the preceding chargeable period, of so much of his share of oil won from the field as he had at the end of that period either— and the difference (if any) is a gross profit if the said aggregate is greater than one-half of the said market value, and is otherwise a gross loss.
not disposed of and not relevantly appropriated; or
disposed of but not delivered,
Subject to subsections (5A) and (5B) below the amounts referred to in subsection (4)(a) above are—
the price received or receivable for so much of any oil won from the field and disposed of by him crude in sales at arm’s length as was delivered by him in the period (excluding oil delivered before 13th November 1974);
the aggregate market value, ascertained in accordance with Schedule 3 to this Act, of so much of any oil (not being light gases) so won and disposed of by him crude otherwise than in sales at arm’s length as was delivered by him in the period (excluding oil delivered before 13th November 1974);
the aggregate market value, ascertained in accordance with Schedule 3 to this Act, of so much of any oil (not being light gases) so won as was relevantly appropriated by him in the period without being disposed of (excluding oil so appropriated before 13th November 1974); and
the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won and disposed of by him otherwise than in sales at arm’s length as was delivered by him in the period; and
one-half of the market value, on the last business day of the period, of so much of his share of oil so won as he had at the end of that period either—
not disposed of and not relevantly appropriated; or
disposed of but not delivered and
the market value, ascertained in accordance with paragraph 3A of Schedule 3 to this Act, of so much of any light gases so won as was relevantly appropriated by him in the period without being disposed of; and
the excess of the nominated proceeds for that period, as defined in section 61 of the Finance Act 1987.
The participator’s licence debit or credit (if any) for the period is the difference (if any) between—
the sum of the amounts mentioned in subsection (7) below; and
the sum of— and that difference (if any) is a licence debit if the sum mentioned in paragraph (a) above is greater than the sum mentioned in paragraph (b) above, and is otherwise a licence credit.
the amount taken into account under paragraph (a) of that subsection in computing his licence debit or credit for the preceding chargeable period; and
the amount of any royalty repaid to the participator in the period in respect of the field;
The Board may by regulations make provision for the purposes of subsection (5)(a) to (c) for determining to which fields and in what proportions blended oil to which subsection (5C) applies is attributable.
The amounts referred to in subsection (6)(a) above are—
the amount shown in the return for the period made under paragraph 2 of Schedule 2 to this Act as the amount of royalty payable for the period in respect of the participator’s share of oil won from the field;
the amount of royalty paid in the period in respect of that share; and
any amount paid in the period in respect of any periodic payment payable to the OGA under any relevant licence otherwise than by way of royalty.
This subsection applies to blended oil within the meaning of section 63(1A) of the Finance Act 1987 (other than light gases) which—
is not gaseous at a temperature of 15 degrees Centigrade and a pressure of one atmosphere, and
is not normally disposed of crude by deliveries in quantities of 25,000 metric tonnes or less.
The amount (if any) to be debited or credited to the participator for the period in respect of expenditure is the sum of the amounts mentioned in subsection (9) below.
the sum of the amounts mentioned in subsection (9) below; and
subject to subsection (10) below, any amount taken into account under paragraph (a) of the said subsection (9) in computing the assessable profit or allowable loss accruing to the participator in the last but one preceding chargeable period;
Regulations under subsection (5B)—
may apply generally or only to specified cases or circumstances,
may make different provision for different cases or circumstances,
may make incidental, consequential, or transitional provision,
shall be made by statutory instrument, and
may not be made unless a draft has been laid before and approved by resolution of the House of Commons.
Subject to section 192 of the Finance Act 1993 the amounts referred to in subsection (8)(a) above are—
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the sum of the amounts which, in the participator's return under paragraph 2 of Schedule 2 to this Act for the period, are, in the case of deliveries falling within sub-paragraph (2)(a) of that paragraph, stated to be the price received or receivable for the oil or, as the case may be, its market value at the material time in the calendar month in which the delivery was made ; and
the sum of the amounts which, in that return, are, in the case of appropriations falling within sub-paragraph (2)(b) of that paragraph, stated to be the market value of the oil at the material time in the calendar month in which the appropriation was made;
the participator’s share, as determined on a claim under Schedule 5 to this Act, of the aggregate of— so far as that share has not been taken into account in any previous assessment to tax or determination;
any expenditure allowable under section 3 or 4 of this Act for the field which has been allowed on such a claim before the Board have made an assessment to tax or a determination on or in relation to him for the period in respect of the field; and
an amount equal to 35 per cent. of so much of that expenditure as has been so allowed on such a claim as qualifying for supplement under this sub-paragraph by virtue of subsection (5) of the said section 3,
the aggregate of— so far as that expenditure and amount have not been taken into account in any previous assessment to tax or determination;
any expenditure allowable in the case of the participator under section 3 or 4 of this Act which has, on a claim made by him under Schedule 6 to this Act, been allowed before the Board have made an assessment to tax or a determination on or in relation to him for the period in respect of the field; and
an amount equal to 35 per cent. of so much of that expenditure as has been so allowed on such a claim as qualifying for supplement under this sub-paragraph by virtue of subsection (5) of the said section 3,
any abortive exploration expenditure allowable in the case of the participator under section 5 of this Act which on a claim made by him under Schedule 7 to this Act has been allowed under that Schedule before the Board have made an assessment to tax or a determination on or in relation to him for the period in respect of the field, so far as that expenditure has not been taken into account in any previous assessment to tax or determination; and
any unrelievable field losses allowable in the case of the participator under section 6 of this Act which on a claim made by him under Schedule 8 to this Act have been allowed under that Schedule before the Board have made an assessment to tax or a determination on or in relation to him for the period in respect of the field, so far as those losses have not been taken into account in any previous assessment to tax or determination ; and
any exploration and appraisal expenditure allowable in the case of the participator under section 5A of this Act which, on a claim made by him under Schedule 7 to this Act, has been allowed under that Schedule before the Board have made an assessment to tax or a determination on or in relation to him for the period in respect of the field, so far as that expenditure has not been taken into account in any previous assessment to tax or determination; and
any research expenditure allowable in the case of the participator under section 5B of this Act which, on a claim made by him under Schedule 7 to this Act, has been allowed under that Schedule before the Board have made an assessment to tax or a determination on or in relation to him for the period in respect of the field, so far as that expenditure has not been taken into account in any previous assessment to tax or determination.
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the amount which would otherwise be taken into account under subsection (8)(b) above for the first-mentioned period shall be increased by the smaller of the following amounts, namely the relevant amount and the amount (if any) taken into account under paragraph (a) of subsection (9) above in computing the assessable profit or allowable loss accruing to the participator in the preceding chargeable period ; and
the amount which would otherwise be taken into account under subsection (8)(b) above for the chargeable period following the first-mentioned chargeable period shall be reduced by an amount equal to that increase.
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Subject to the provisions of this section and Schedules 4, 5 and 6 to this Act, the expenditure allowable under this section for any oil field is any expenditure (whether or not of a capital nature) which, not being expenditure to which section 4 of this Act applies, is incurred by a person at or before the time when he is a participator in the field to the extent subject to subsection (7) below that it is incurred for one or more of the following purposes, namely—
searching for oil anywhere within the area of the field as subsequently determined under Schedule 1 to this Act or not more than 5,000 metres beyond the boundary of that area;
making to the OGA any payment under or for the purpose of obtaining a relevant licence, not being a payment by way of royalty or other periodic payment;
ascertaining (whether before or after the determination of the field under Schedule 1 to this Act) the extent or characteristics of any oil-bearing area wholly or partly included in the field, or what the reserves of oil of any such oil-bearing area are;
winning oil from the field;
measuring the quantity of oil won or to be won from the field;
in the case of oil won from the field that was so won from strata in the sea bed and subsoil of either the territorial sea of the United Kingdom or a designated area, transporting it at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one place at which he could reasonably be expected to deliver it, the one nearest to the place of extraction;
to the place where it is first landed in the United Kingdom or
to the place in the United Kingdom or, in the case of oil first landed in another country, to the place in that or any other country (other than the United Kingdom)
the initial treatment or initial storage of oil won from the field;
disposing of any oil won from the field which is disposed of crude in sales at arm’s length;
obtaining an abandonment guarantee, as defined in section 104 of the Finance Act 1991
closing down the field or any part of it, but only if and to the extent that the expenditure is incurred for the purposes of safety or the prevention of pollution.
closing down, decommissioning, abandoning or wholly or partially dismantling or removing any qualifying asset;
Subject to the following provisions of this section and Schedules 4, 5 and 6 to this Act, where any amount is ... under section 77 of the Income Tax (Trading and Other Income) Act 2005 (“ITTOIA 2005”) or section 77 of the Corporation Tax Act 2009 (statutory redundancy payments) allowable as a deduction in computing for any accounting period the profits or losses of the relevant trade carried on by a person who was in that period a participator in an oil field, or would be so allowable under ... that section if it were not otherwise so allowable, then that amount ... shall be expenditure allowable under this section for that field. In this subsection “the relevant trade”, in relation to a participator in an oil field, means the separate trade which by virtue of section 16 of ITTOIA 2005 or section 279 of CTA 2010 consists of activities carried on by the participator that fall within the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or section 274 of CTA 2010 or which would have so consisted if those sections had additionally had effect as regards all past chargeable periods (as defined by section 1119 of CTA 2010).
carrying out qualifying restoration work consequential upon the closing down of the field or any part of it.
Expenditure is not allowable under this section for any oil field if, or to the extent that, it has been allowed under Schedule 5 or 6 to this Act for any other oil field or has been allowed under Schedule 7 to this Act in connection with any oil field but where expenditure allowable under section 5A or section 5B of this Act has been allowed on a claim under Schedule 7 to this Act, nothing in this subsection shall prevent a claim being made for an allowance under this section in respect of the same expenditure unless the person making the claim is the participator who made the claim under that Schedule.
In this section “qualifying asset” has the same meaning as in the Oil Taxation Act 1983; and, in the case of a qualifying asset which was leased or hired, the reference in subsection (1)(i) above to decommissioning includes a reference to carrying out any restoration or similar work which is required to be carried out to comply with the terms of the contract of lease or hire.
The expenditure allowable under this section for any oil field does not include— but nothing in paragraph (e) above shall be taken to apply to a payment made by a participator in pursuance of a contract whereby expenditure incurred for any of the purposes mentioned in subsection (1) above is to be shared between that participator and any of the other participators in the field.
expenditure in respect of interest or any other pecuniary obligation incurred in obtaining a loan or any other form of credit; or
the cost of acquiring any land or interest in land, other than the cost of making to the OGA any payment falling within subsection (1)(b) above; or
the cost of acquiring or erecting any building or structure on land, except—
a structure to be subsequently placed on the sea bed . . .; or
a building or structure used or to be used wholly in the process of winning oil from strata in or under land or of measuring the quantity of oil won or to be won from such strata; or
a building or structure used or to be used for initial treatment or initial storage of oil; or
a building or structure used or to be used for transporting such oil as is mentioned in subsection (1)(f) above from the place where it is first landed to the place in the United Kingdom or, in the case of oil first landed in another country, to the place in that or any other country (other than the United Kingdom) at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one place at which he could reasonably be expected to deliver it, the one nearest to the place of extraction; or
any expenditure wholly or partly depending on or determined by reference to the quantity, value or proceeds of, or the profits from, oil won from the field; . . .
any payment made for the purpose of obtaining a direct or indirect interest in oil won or to be won from the field, other than a payment made to the OGA ; or
any payment made in pursuance of a notice under section 77C of the Taxes Management Act 1970 (notice requiring licence-holder to pay unpaid tax assessed on non-UK resident);
In subsection (1)(j) above “qualifying restoration work”, in relation to a participator in an oil field, means—
restoring (including landscaping) land on which a qualifying asset is or was situated; or
restoring the seabed (including the subsoil thereof) on which a qualifying asset is or was situated.
Subject to subsection (5A) below expenditure allowable under this section for an oil field qualifies for supplement under section 2(9)(b)(ii) or (c)(ii) of this Act if and to the extent that it is incurred for one or more of the following purposes, namely— but expenditure incurred in hiring an asset shall not so qualify unless the asset is used in carrying out works for a purpose mentioned in paragraph (a), (b) or (c) above or works for the provision of any such installation as is mentioned in paragraph (d) above.
bringing about the commencement of the winning of oil from the field or the commencement of the transporting of oil won from it to the United Kingdom or another country;
ascertaining (whether before or after the determination of the field under Schedule 1 to the Act) any of the matters mentioned in subsection (1)(c) above;
carrying out works for, or acquiring an asset or an interest in an asset to be used for the purpose of, substantially improving the rate at which oil can be won or transported to the United Kingdom or another country from the field, or preventing or substantially reducing a decline in that rate; or
providing any installation for the initial treatment or initial storage of oil won from the field;
In any case where— only the relevant portion of the expenditure is allowable for the field under subsection (1)(i) or (j) above.
any expenditure incurred by a participator in a taxable field would, apart from this subsection, be allowable for the field under subsection (1)(i) or (j) above, and
the qualifying asset that is relevant to the incurring of that expenditure has at some time been used otherwise than for a qualifying purpose,
Without prejudice to any apportionment under subsections (1C) and (1D) above for the purposes of subsections (1) and (5) above other than paragraph (hh) of subsection (1) expenditure incurred partly for one or more of the purposes there mentioned and partly not shall subject to subsection (7) below be apportioned in such manner as is just and reasonable and where, in the case of oil won as mentioned in paragraph (f) of subsection (1) above, expenditure is incurred in transporting—.
oil first landed in the United Kingdom to a place in the United Kingdom which is not the nearest place referred to in sub-paragraph (ii) of that paragraph, or
oil first landed in another country to a place in that or any other country (other than the United Kingdom) which is not the nearest place so referred to, so much of that expenditure as does not exceed what would have been the expenditure incurred in transporting it to that nearest place shall be regarded as falling within the said paragraph (f).
In subsection (1C) above “the relevant portion” of the expenditure is the portion of the expenditure that it is just and reasonable to apportion to use of the asset that is use for a qualifying purpose.
In subsections (1C) and (1D) a reference to use for a qualifying purpose is a reference to—
use in connection with the taxable field mentioned in subsection (1C), and
other use in— except use wholly or partly for an ineligible oil purpose.
the United Kingdom,
the territorial sea of the United Kingdom, or
a designated area,
In subsection (1DA)(b) the reference to use for an ineligible oil purpose is a reference to—
use in connection with an oil field other than the taxable field mentioned in subsection (1C), and
use for any other purpose (apart from a purpose falling within section 3(1)(b)) of a separate trade consisting of activities falling within the definition of “oil-related activities” in section 274 of CTA 2010.
In subsections (1DA) and (1DB) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of the Oil Taxation Act 1983, are tariff receipts.
Subsections (1C) and (1D) above have effect subject to the transitional provisions in section 102(5) to (11) of the Finance Act 2001.
Where expenditure incurred in relation to an asset is incurred— then, to the extent that the expenditure is incurred for the purpose mentioned in paragraph (b) above, it shall be treated for the purposes of this Part of this Act as incurred for one of the purposes specified in subsection (5) above.
in part for one of the purposes specified in subsection (5) above (or for what would be one of those purposes if section 10(2) below were disregarded), and
in part for the purpose of enabling the asset to be used in a way giving rise to tariff receipts within the meaning of the Oil Taxation Act 1983,
Expenditure incurred by a participator in an oil field shall be taken to be incurred for the purpose mentioned in paragraph (hh) of subsection (1) above if, and only if,— and expressions used in this subsection shall be construed in accordance with section 104 of the Finance Act 1991.
it consists of fees, commission or incidental costs incurred wholly and exclusively for the purposes of obtaining an abandonment guarantee; and
the abandonment guarantee is obtained in order to comply with a term of a relevant agreement relating to that field under which the participator is required to provide security (whether or not specifically in the form of an abandonment guarantee) in respect of his liabilities to contribute to field abandonment costs;
In any case where— then, so far as relates to that field, in making in accordance with subsection (6) above any apportionment for the purposes of either or both of subsections (1) and (5) above, the whole of the relevant expenditure shall be apportioned to one or more of the purposes mentioned in that subsection or, as the case may be, those subsections.
expenditure which is incurred by any person as mentioned in subsection (6) above is so incurred in connection with a long-term asset, and
the long-term asset gives rise to receipts which, for the purposes of the Oil Taxation Act 1983, are tariff receipts of that person attributable to the field for which any of that expenditure is so allowable,
In subsection (7) above—
“long-term asset” means an asset whose useful life continues after the end of the claim period for which a claim is first made for an allowance in respect of expenditure incurred in connection with the asset; and
“relevant expenditure” means that portion of the expenditure in connection with the asset which is reasonably attributable to the use of the asset which gives rise to the receipts referred to in subsection (7)(b) above.
Subject to subsection (13) below and section 1 of the Oil Taxation Act 1983, this section applies to expenditure (whether or not of a capital nature) which is incurred by a person at or before the time when he is a participator in an oil field, being expenditure incurred in acquiring, bringing into existence, or enhancing the value of an asset which is to be or is subsequently used in connection with the field and which, at the end of the first relevant claim period, is or is expected to be a long-term asset as defined in section 3(8) of the Oil Taxation Act 1983: Provided that this section shall not apply to expenditure incurred as aforesaid in any case where the Board consider that its application to that expenditure would have only a negligible effect on the total expenditure allowable under this Part of this Act for the field and so notify the responsible person.
The following provisions of this section are subject to Schedules 4, 5 and 6 to this Act.
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after the expenditure was incurred, the asset was in that period used (if at all) only in connection with the field; and
at the end of that period it was reasonable to assume that the asset would from then until the end of its useful life be used only in connection with the field; and
the asset is not a mobile asset.
If the whole of the expenditure is not by virtue of subsection (3) above allowable on a claim for the first relevant claim period, subsections (5) and (6) below shall apply as regards that claim period.
Subject to the following provisions of this section, a proportion of the expenditure shall be allowable under this section on a claim for the first relevant claim period, and that proportion is . . . the proportion which the time during which the asset has been used in connection with the field in the period between the incurring of the expenditure or the asset’s first use in connection with the field (whichever is later) and the end of the first relevant claim period bears to the time between the incurring of the expenditure and the date when the asset’s useful life is reasonably likely to end: Provided that, where the asset was not used for any purpose in the period between the incurring of the expenditure and the asset’s first use in connection with the field, the expenditure shall for the purposes of this subsection be treated as having been incurred on the date when the asset was first used in connection with the field.
if, at the end of that period, a reasonable estimate can be made of the proportion which the time during which the asset will eventually have been used in connection with the field in the period between the incurring of the expenditure or the asset's first use in that connection (whichever is later) and the date on which its useful life is reasonably likely to end bears to the time between the incurring of the expenditure and that date, the same proportion as that estimated proportion;
in any other case, the proportion which the time during which the asset has been used in that connection in the period between the incurring of the expenditure or the asset's first use in that connection (whichever is later) and the end of the first relevant claim period bears to the time between the incurring of the expenditure and the date when the asset's useful life is reasonably likely to end:
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For each claim period subsequent to the first relevant claim period and up to and including that in which use of the asset in connection with the field permanently ceases, the proportion of the expenditure allowable under this section for the relevant period shall be computed by applying the provisions of subsection (5) above with the omission of the words “on a claim” (wherever occurring) and the substitution of references to the relevant period for references to the first relevant claim period. For the purposes of this subsection “the relevant period”, in relation to a claim period, means the period consisting of that claim period and each earlier claim period back to and including that in which the expenditure was incurred.
If, as computed under subsection (7) above for any claim period, the proportion of the expenditure allowable for the relevant period exceeds the amount thereof which (taking into account any previous adjustments made under the following subsection) has been allowed on claims made for earlier claim periods falling within the relevant period, the excess shall be allowable under this section on a claim for that claim period.
If, as computed under subsection (7) above for any claim period, the proportion of the expenditure allowable for the relevant period is exceeded by the amount thereof which (taking into account any previous adjustments made under this subsection) has been allowed on claims made for earlier claim periods falling within the relevant period, the total amount of expenditure allowable under this and the preceding section on a claim for the first-mentioned claim period shall be reduced by an amount equal to the excess.
Subsections (3) to (5) of section 3 of this Act shall apply for the purposes of this section as they apply for the purposes of that section; and where in accordance with subsection (9) above the total amount of the expenditure allowable under this and the preceding section on a claim for any claim period is reduced, the amount falling to be taken into account under section 2(9)(b)(ii) or (c)(ii) of this Act by reference to that expenditure shall be reduced by a proportion equal to the proportion by which the total amount of that expenditure is so reduced.
For the purposes of subsection (5) above (including that subsection as it applies under subsection (7) above) an asset which is throughout any period of time simultaneously used partly in connection with the field and partly otherwise shall be treated as being used in connection with the field for a proportion of that period equal to the proportion which the extent of its use in the period in that connection bears to the extent of its use in the period in that connection and otherwise.
For the purposes of this section—
the asset is a brought-in asset if, between the time when it was acquired or brought into existence and its first use in connection with the field, the asset was used otherwise than in connection with the field; and
“the first relevant claim period”—
in the case of expenditure incurred in acquiring or bringing into existence a brought-in asset, means the claim period in which the asset was first used in connection with the field; and
in the case of any other expenditure, means the claim period in which the expenditure was incurred.
The preceding provisions of this section, and any other provisions in this Part of this Act as to which it is provided that this subsection applies, shall, with any necessary modifications, apply in relation to expenditure incurred by a person in acquiring an interest in an asset, or in bringing into existence an asset in which he is to have an interest, or in enhancing the value of an asset in which he has an interest, as the provisions in question apply in relation to expenditure incurred by a person in acquiring, bringing into existence, or enhancing the value of an asset, as the case may be.
Subject to the following provisions of this section and Schedule 7 to this Act, the abortive exploration expenditure allowable in the case of a person who is a participator in an oil field is any expenditure (whether or not of a capital nature) incurred on or after 1st January 1960 and before 16th March 1983 which— but so that any expenditure to which subsection (2) below applies shall not be allowable under this section except to the extent that it falls by virtue of that subsection to be treated as incurred wholly and exclusively for the purpose mentioned in paragraph (b) above.
was incurred by that person or, if that person is a company, by that company or a company associated with it in respect of the expenditure; and
was incurred wholly and exclusively for the purpose of searching for oil in the United Kingdom, the territorial sea thereof or a designated area; and
is not, and is unlikely to become, allowable under section 3 or 4 of this Act for any oil field,
Where any person has incurred expenditure in acquiring, bringing into existence, or enhancing the value of an asset which is subsequently used by him for the purpose mentioned in paragraph (b) of subsection (1) above, then— Section 4(13) of this Act applies to the preceding provisions of this subsection.
subject to paragraph (b) below, if the useful life of the asset continues after the end of the twelve months beginning with the day on which he acquired the asset or brought it into existence, he shall be treated for the purposes of that subsection as having incurred wholly and exclusively for that purpose a fraction of that expenditure on each day after the expenditure was incurred on which the asset is used by him wholly and exclusively for that purpose, and that fraction is the fraction of which the numerator is 1 and the denominator is the number of days in the period beginning with the day on which he incurred that expenditure and ending with the day on which the asset’s useful life is reasonably likely to end;
if a subsequent disposal of the asset by that person otherwise than to a person connected with him gives rise to the receipt of a sum that falls to be taken into account under subsection (6) below, being a sum not less than the price which the asset might reasonably have been expected to fetch if sold in the open market at the time of the disposal, paragraph (a) above shall apply with the substitution, for the reference to the day on which the asset’s useful life is reasonably likely to end, of a reference to the day on which the disposal was made.
For the purpose only of determining under paragraph (c) of subsection (1) above whether expenditure is or is likely to become allowable for any oil field, it shall be assumed that any oil field which, apart from this subsection, would be a non-taxable field is or, as the case may be, will be a taxable field and, accordingly, that section 185(4)(e) of the Finance Act 1993 (no expenditure allowable for non-taxable fields) does not apply.
Expenditure is not allowable under this section in connection with an oil field if, or to the extent that, it has been allowed under Schedule 7 to this Act in connection with any oil field.
Subsection (4) of section 3 of this Act shall apply for the purposes of this section with the following modifications, that is to say—
in paragraph (c) the words from “except” to the end of sub-paragraph (iii) shall be omitted;
paragraph (d) shall be omitted;
in paragraph (e), the reference to oil won or to be won from the field shall be read as a reference to oil won or to be won from any area whatsoever.
Paragraph 2 of Schedule 4 to this Act shall, . . . , apply in relation to this section as it applies in relation to sections 3 and 4 of this Act.
Where any expenditure which would otherwise be allowable under this section gives rise to the receipt of any sum (whether or not of a capital nature) by the person who incurred the expenditure or any person connected with him, that expenditure shall for the purposes of this section be reduced by an amount equal to that sum.
For the purposes of this section—
“company” means any body corporate;
section 1122 of CTA 2010 (connected persons) shall apply; and
a company which is a participator in an oil field is associated with another company in respect of expenditure incurred by the other company if—
throughout that part of the relevant period in which both were in existence one was a 51 per cent. subsidiary of the other and the other was not a 51 per cent. subsidiary of any company; or
each of them was, throughout that part of the relevant period in which it was in existence, a 51 per cent. subsidiary of a third company which was not itself a 51 per cent. subsidiary of any company.
For the purposes of subsection (7)(c) above—
“the relevant period” is the period beginning immediately before the expenditure was incurred and ending with the end of whichever of the following periods ends later, that is to say— (or, if they are the same period, with the end of that period); and
the earliest chargeable period in which the company which is a participator in the oil field in question was a participator in that field; and
the chargeable period (for that field) in which the expenditure was incurred,
Chapter 3 of Part 24 of CTA 2010 (subsidiaries) shall apply.
The exploration and appraisal expenditure which, subject to the provisions of this section and Schedule 7 to this Act, is allowable in the case of a person who is a participator in an oil field is any expenditure (whether or not of a capital nature) which—
is incurred after 15th March 1983 by that person or, if that person is a company, by that company or a company associated with it in respect of the expenditure; and
either is incurred before 16th March 1993 or is incurred within the period of two years beginning on that date and is expenditure to which that person or, if that person is a company, that company or a company associated with it in respect of the expenditure, is committed immediately before that date; and
is so incurred wholly and exclusively for one or more of the purposes specified in subsection (2) below; and
at the time it is so incurred, does not relate to a field for which a development decision has previously been made.
For the purposes of subsection (1)(aa) above, in respect of expenditure incurred on or after 16th March 1993, a person is to be regarded as committed to that expenditure immediately before that date if—
he has an obligation under an exploration and appraisal contract entered into before that date to incur the expenditure; or
the expenditure is incurred wholly and exclusively for the same purpose as that for which the contract referred to in paragraph (a) above was entered into and is so incurred pursuant to an obligation under an exploration and appraisal contract entered into on or after 16th March 1993 and before 16th June 1993.
In considering whether a person has at any time such a contractual obligation as is referred to in paragraph (a) or paragraph (b) of subsection (1A) above in respect of any expenditure,
if the contract contains a power (however exercisable) by virtue of which the person concerned, or a company associated with him in respect of the expenditure, is able to bring any contractual obligations to an end, he shall not be regarded as committed to any expenditure which, if the power were to be exercised, would not be incurred; and
if the person concerned (or a company associated with him in respect of the expenditure) has an option (however described) which was not exercised before 16th March 1993 but the exercise of which would increase his expenditure under the contract, he shall not be regarded as committed to any expenditure which would be incurred only as a result of the exercise of the option.
For the purposes of subsection (1A) above a contract is an exploration and appraisal contract if it is a contract for the provision of any services or other business facilities or assets for any of the purposes specified in subsection (2) below.
The purposes referred to in subsections (1) to (1C) above are—
the purpose of searching for oil in the territorial sea of the United Kingdom or a designated area;
the purpose of ascertaining the extent or characteristics of any oil-bearing area in the territorial sea of the United Kingdom or a designated area;
the purpose of ascertaining what are the reserves of oil of any such oil-bearing area; and
subject to subsection (3) below, the purpose of making to the OGA any payment under or for the purpose of obtaining a licence (not being a payment by way of royalty or other periodic payment).
Any reference in subsection (2) above to a designated area does not include a sector which, by virtue of subsection (3)(b) of section 107 of the Finance Act 1980 (transmedian fields), is deemed to be a designated area.
Expenditure incurred for the purpose mentioned in subsection (2)(d) above is not allowable under this section unless, at the time the allowance is claimed,— and where paragraph (b) above applies only that proportion of the expenditure which corresponds to the proportion of the licensed area which has been surrendered is expenditure falling within subsection (1) above.
the licence to which the expenditure related has expired or has been determined or revoked; or
part of the licensed area has been surrendered;
Subject to subsection (5) below, subsections (2) and (4) to (8) of section 5 of this Act apply for the purposes of this section as they apply for the purposes of that section.
In the application for the purposes of this section of the provisions of section 5 of this Act referred to in subsection (4) above,—
any reference in subsection (2) of section 5 to the purpose mentioned in subsection (1)(b) of that section shall be construed as a reference to any of the purposes specified in subsection (2) of this section;
the reference in subsection (2)(a) of section 5 to subsection (1) of that section shall be construed as a reference to subsection (1) of this section; and
the reference in subsection (6) of section 5 to a sum received—
includes a reference to a sum received, or treated by virtue of subsection (5A) below as received, from the disposal of oil won in the course of operations carried out for any of the purposes in paragraphs (a) to (c) of subsection (2) of this section; but
does not include a reference to a sum received for the assignment of any of the rights conferred by a licence or of any interest in a licensed area.
Subsection (5B) below applies in any case where—
oil which is won as mentioned in paragraph (c)(i) of subsection (5) above is either disposed of otherwise than in sales at arm’s length or appropriated to refining or to any use except for production purposes of an oil field, and
if that oil had been disposed of in a sale at arm’s length, then, by virtue of section 5(6) of this Act as applied by subsection (5) above, certain expenditure would have been reduced by reference to the receipt of a sum from that disposal.
Where this subsection applies, the oil concerned shall be treated for the purposes of subsection (5)(c)(i) above and section 5(6) of this Act as having been disposed of for a sum equal to its market value at the material time determined in accordance with Schedule 3 to this Act for the disposal or appropriation mentioned in subsection (5A)(a) above and, accordingly, for those purposes—
a sum equal to that market value shall be treated as having been received from that disposal; and
no account shall be taken of any sum actually received from the disposal of any of that oil.
In the application of Schedule 3 to this Act for the purpose of ascertaining the market value of oil as mentioned in subsection (5B) above,—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
sub-paragraph (4) of paragraph 2 shall be omitted; and
any reference in paragraphs 2 and 2A to oil being relevantly appropriated shall be construed as a reference to its being appropriated as mentioned in subsection (5A)(a) above; and
any reference in paragraph 2 to the notional delivery day for the actual oil shall be construed as a reference to the day on which the oil is disposed of or appropriated as mentioned in subsection (5A)(a) above.
Expenditure is not allowable under this section in connection with an oil field if, or to the extent that, it has been allowed under Schedule 5, Schedule 6 or Schedule 7 to this Act in connection with any oil field.
For the purposes of subsection (1)(c) above, a development decision is made when— and subsections (4) and (5) of section 36 of the Finance Act 1983 (meaning of development etc.) apply in relation to this subsection as they apply in relation to subsections (2) and (3) of that section.
consent for development is granted to a licensee by the OGA in respect of the whole or part of an oil field; or
a programme of development is served on a licensee or approved by the OGA for the whole or part of an oil field;
If, at the time when it is incurred, expenditure relates to an area— that area shall be treated for the purposes of this section as having become an oil field at the time the notice was given unless, when the actual determination is made, the area is not included in an oil field.
which is not then an oil field, but
in respect of which notice of a proposed determination has previously been given under paragraph 2(a) of Schedule 1 to this Act,
In the case of a participator in an oil field, an allowable unrelievable field loss is the unrelievable portion of an allowable loss falling within subsection (1B) below.
Subsection (1) above is subject to subsections (5) to (9) below and Schedule 8 to this Act and paragraph 6 of Schedule 20B to the Finance Act 1993.
In determining for the purposes of this section whether an allowable loss has accrued as mentioned in subsection (1B) above from an oil field from which the winning of oil permanently ceased before the total amount of oil ever won and saved from it reached the amount by reference to which the critical half year is defined in section 1(4) of this Act, the first chargeable period for that field shall be taken to have been the period ending at the end of the half year in which the winning of oil from the field so ceased (including an unlimited time prior to the beginning of that half year). In this subsection “half year” has the same meaning as in section 1 of this Act.
An allowable loss falls within this subsection if—
the loss accrued in any chargeable period from another field (“the abandoned field”),
the person to whom the loss accrued is—
the participator, or
if the participator is a company, a company associated with the participator in respect of the loss (see subsection (3) below),
the loss accrued to that person as a participator in the abandoned field, and
the winning of oil from the abandoned field has permanently ceased.
For the purposes of this section—
“company” means any body corporate; and
a company which is a participator in an oil field is associated with another company in respect of an allowable loss which accrued to that other company in a chargeable period from another oil field if— and in this section and Schedule 8 to this Act any reference to the winning of oil from an oil field permanently ceasing includes a reference to the permanent cessation of operations for the winning of oil from the field.
throughout that part of the relevant period in which both were in existence one was a 51 per cent. subsidiary of the other and the other was not a 51 per cent. subsidiary of any company; or
each of them was, throughout that part of the relevant period in which it was in existence, a 51 per cent. subsidiary of a third company which was not itself a 51 per cent. subsidiary of any company;
The “unrelievable portion” of an allowable loss falling within subsection (1B) above is so much of that loss as cannot under the provisions of section 7 of this Act be relieved against assessable profits accruing from the abandoned field to the person to whom the loss accrued.
For the purposes of subsection (3)(b) above—
the relevant period is the period beginning with the chargeable period in which the allowable loss accrued to the other company referred to in that paragraph and ending with the end of whichever of the following period ends later, that is to say— (or, if they are the same period, with the end of that period); and
the earliest chargeable period in which the company which is a participator in the oil field in question was a participator in that field; and
the chargeable period in which the allowable loss accrued,
Chapter 3 of Part 24 of CTA 2010 (subsidiaries) shall apply.
Subsection (1C) above is subject to Schedule 32 to the Finance Act 2001 (determination of unrelievable portion where Parts 2 and 3 of Schedule 17 to the Finance Act 1980 did not apply to transfer of interest in abandoned field).
For the purposes of this section and Schedule 8 to this Act, the winning of oil from an oil field shall not be regarded as having permanently ceased until all the oil wells in the field have been permanently abandoned.
Subsections (6) to (9) below apply if—
a claim is made for the allowance of an unrelievable field loss; and
the person to whom the loss accrued made a claim or election for the allowance of any expenditure unrelated to that field; and
that claim or election was received by the Board on or after 29th November 1994; and
the whole or a part of the expenditure to which the claim or election relates is allowed and, accordingly, falls to be taken into account under section 2(8)(a) of this Act for a chargeable period (whether beginning before or after 29th November 1994).
Subject to subsection (7) below, where this subsection applies, from the amount which, apart from this subsection, would be the amount of the unrelievable field loss referred to in paragraph (a) of subsection (5) above there shall be deducted an amount equal to so much of any expenditure unrelated to the field as is allowed on a claim or election as mentioned in paragraph (d) of that subsection.
If— subsection (6) above shall have effect as if the deduction referred to in that subsection fell to be made from the aggregate amount of those losses.
claims are made for the allowance of more than one unrelievable field loss derived from the same abandoned field, and
the person to whom the loss accrued is the same in respect of each of the unrelievable field losses,
Where subsection (7) above applies, the deduction shall be set against the unrelievable field losses in the order in which the claims for the allowance of each of those losses were received by the Board.
In subsections (5) and (6) above, “expenditure unrelated to the field” means— and, in relation to expenditure falling within section 65 of the Finance Act 1987, “election” means an election under Part I of Schedule 14 to that Act.
expenditure allowable under any of sections 5, 5A and 5B of this Act;
expenditure allowable under this section (derived from a different abandoned field); or
expenditure falling within section 65 of the Finance Act 1987 which is accepted by the Board as allowable in accordance with Schedule 14 to that Act;
Subject to the following provisions of this section and Schedule 7 to this Act, the research expenditure which is allowable in the case of a person who is a participator in an oil field is any expenditure (whether or not of a capital nature) which—
is incurred by him on or after 17th March 1987; and
at the expiry of the period of three years from the time at which it was incurred, has not become allowable under section 3 or section 4 of this Act or section 3 of the Oil Taxation Act 1983; and
was not incurred for purposes relating to a particular oil field; and
was not incurred wholly and exclusively for one or more of the purposes which, subject to subsection (2) below, are specified in section 5A(2) of this Act; and
was incurred for the purpose of research of such a description that, if it had been incurred by the participator in relation to a particular field, it would have been allowable for that field under section 3 or section 4 of this Act or section 3 of the Oil Taxation Act 1983; and
was incurred wholly or partly for United Kingdom purposes.
For the purposes only of subsection (1)(d) above, any reference in section 5A(2) of this Act to the territorial sea of the United Kingdom shall be taken to include a reference to the United Kingdom itself.
Where expenditure falling within paragraphs (a) to (e) of subsection (1) above is incurred partly for United Kingdom purposes and partly for other purposes, only such part of the expenditure as it is just and reasonable to apportion to United Kingdom purposes shall be allowable by virtue of this section.
In subsections (1)(f) and (3) above, “United Kingdom purposes” means purposes relating to the United Kingdom, the territorial sea thereof or designated areas, excluding any sector which, by virtue of subsection (3)(b) of section 107 of the Finance Act 1980 (transmedian fields), is deemed to be a designated area.
Expenditure is not allowable under this section if, or to the extent that, it has been allowed under Schedule 5, Schedule 6 or Schedule 7 to this Act for or in connection with an oil field.
To the extent that it is reasonable to assume that expenditure which, apart from this subsection, would be allowable under this section has been incurred for purposes relating to excluded oil, within the meaning of section 10(1) of this Act or for purposes relating to non-taxable fields, that expenditure is not allowable under this section.
Subject to subsection (3) above, subsections (2) and (6) of section 5 of this Act apply for the purposes of this section as they apply for the purposes of that section except that—
any reference in subsection (2) of section 5 to the purpose mentioned in subsection (1)(b) of that section shall be construed as a reference to the purpose referred to in subsection (1)(e) of this section;
the reference in paragraph (a) of subsection (2) to subsection (1) of that section shall be construed as a reference to subsection (1) of this section; and
where any expenditure falls to be apportioned under subsection (3) of this section, any receipt to which it gives rise shall be similarly apportioned in the application of subsection (6) of section 5.
Paragraph 2 of Schedule 4 to this Act applies in relation to this section as it applies in relation to sections 3 and 4 of this Act.
Where the Board have determined under Schedule 2 to this Act that an allowable loss has accrued to a participator in a chargeable period from an oil field, then, subject to the following provisions of this section, the assessable profit accruing to him from the field in any succeeding chargeable period shall be treated as reduced by the amount of that allowable loss, or by so much of that amount as cannot, under this subsection or on a claim (if made) under subsection (2) below, be relieved against the assessable profit accruing to him from the field in any earlier chargeable period.
Where the Board have determined under Schedule 2 to this Act that an allowable loss has accrued to a participator in a chargeable period from an oil field, the participator may make a claim requiring that the loss be in the first instance set against any assessable profit which accrued to him from the field in any preceding chargeable period; and the assessable profit which so accrued to him in any such period shall then be treated as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this subsection against any assessable profit accruing to him from the field in a later chargeable period.
Where— then so much of that allowable loss as cannot under subsection (1) or (2) above be relieved against assessable profits accruing to the participator from the field shall be relieved under this subsection by treating the assessable profit accruing to him from the field in any chargeable period as reduced by the amount of the loss, or by so much of that amount as cannot be relieved under this section against the assessable profit so accruing to him in a later chargeable period.
the Board have determined under Schedule 2 to this Act that an allowable loss has accrued to a participator in a chargeable period from an oil field; and
the winning of oil from that field has permanently ceased,
Subject to the provisions of this section and paragraphs 10 and 11 of Schedule 3 to this Act, where a participator in an oil field would, apart from this section and section 9 of this Act, be chargeable to tax for any chargeable period on an amount (“the said amount”) consisting of the assessable profit accruing to him in the period from the field or that profit as reduced under section 7 of this Act by any allowable losses, then for the purpose of determining his liability, if any, to tax for that period, the said amount shall be treated as reduced or further reduced as follows, that is to say—
if the said amount exceeds the cash equivalent of his share of the oil allowance for the field for that period, to an amount equal to the excess; or
if the said amount does not exceed the cash equivalent of his share of that allowance, to nil.
The oil allowance for an oil field is, for each chargeable period, 250,000 metric tonnes, and shall be divided between the participators in shares proportionate to their shares of the oil won and saved from the field during the period.
For the purposes of this section the cash equivalent of a participator’s share of the oil allowance for an oil field for a chargeable period is (subject to subsection (4) below) the amount given by the formula:— where— A is the gross profit accruing to him in the period or, if a gross loss (or neither a gross profit nor a gross loss) accrues to him in the period, nil (in which case the cash equivalent itself will be nil); B is his share of the allowance, in metric tonnes; and C is his share, exclusive of excluded oil within the meaning of section 10 of this Act, of the oil won and saved from the field during the period, in metric tonnes.
If a participator in an oil field so elects by notice in writing given to the Board at the time when he makes his return under paragraph 2 of Schedule 2 to this Act for a chargeable period, then the cash equivalent of his share of the oil allowance for the field for that period shall be determined under subsection (3) above—
to the extent that his share of that oil allowance does not exceed his share of the oil (other than gas) won and saved from the field in the period, as if—
in computing the gross profit or gross loss accruing to him in the period all amounts relating to gas fell to be disregarded, and
in the definition of C, for “the oil won and saved” there were substituted “the oil (other than gas) won and saved”; and
to the extent, if any, that his share of that oil allowance exceeds his share of the oil (other than gas) so won and saved, as if—
in computing the gross profit or gross loss so accruing all amounts relating to oil other than gas fell to be disregarded, and
in the definition of C, for “the oil won and saved” there were substituted “the gas won and saved”.
For the purposes of this section the amount of the oil allowance for an oil field utilised by a participator in any chargeable period is—
if in his case a reduction is made for that period under subsection (1)(a) above, an amount in metric tonnes equal to his share of the oil allowance for the field for that period;
if in his case a reduction is made for that period under subsection (1)(b) above, the amount in metric tonnes arrived at by multiplying his share of the oil allowance for the field for that period (in metric tonnes) by the fraction of which the numerator is the amount of that reduction and the denominator is the cash equivalent of his share of the said oil allowance;
in any other case, nil.
The total oil allowance for an oil field shall not exceed 5 million metric tonnes, and accordingly— In this subsection “the necessary restriction” means the restriction necessary to secure that the aggregate determined under paragraph (a) above for the chargeable period to which paragraph (b) above applies will, when added to the sum of the aggregates so determined for each earlier chargeable period, produce a total of 5 million metric tonnes.
for each chargeable period there shall be determined the aggregate of the amounts of the oil allowance for the field utilised by the participators in that period; and
as regards the earliest chargeable period such that the sum of the aggregate determined under paragraph (a) above for that period and the aggregates so determined for each earlier chargeable period would, apart from this subsection, exceed 5 million metric tonnes, the necessary restriction shall be apportioned between the participators in such manner as may be notified to the Board by the responsible person or, in default of such notification, as may be determined by the Board.
For the purposes of this section 1,100 cubic metres of oil consisting of gas at the temperature and pressure mentioned in section 1(4) of this Act shall be counted as equivalent to one metric tonne of oil other than gas.
Any reduction to be made under subsection (1) above shall be made before applying the provisions of section 9 of this Act.
The tax payable by a participator in an oil field for any chargeable period to which this subsection applies shall not exceed 80 per cent. of the amount (if any) by which his adjusted profit for that period (as defined in this section) exceeds 15 per cent. of his accumulated capital expenditure at the end of that period (as so defined).
Subsection (1) above applies to— and for the purposes of paragraph (b) above 1,100 cubic metres of gas at a temperature of 15 degrees centigrade and pressure of one atmosphere shall be counted as equivalent to one metric tonne.
any chargeable period from the first chargeable period up to and including the period which is the participator’s net profit period for the field for the purposes of section 111 of the Finance Act 1981 or where section 113 of that Act applies, up to and including the earlier of the periods mentioned in subsection (2) of that section; and
any subsequent chargeable period up to such number of periods as is equal to half the number of chargeable periods which are included in paragraph (a) above and in which the amount of oil won and saved from the field exceeds 1,000 metric tonnes (counting any resulting fraction of a period as a whole period)
The adjusted profit of a participator in an oil field for any chargeable period shall be determined as follows—
there shall be ascertained—
the assessable profit (without any reduction under section 7 or 8 of this Act) or allowable loss accruing to him in that period; and
the total amount taken into account under section 2(9)(b), (c), (d) , (e) (f) and (g) of this Act in computing that profit or loss, excluding expenditure so taken into account under section 2(9)(b)(i) or (c)(i) which was not allowed as qualifying for supplement under section 2(9)(b)(ii) or (c)(ii);
if there is a profit under paragraph (a)(i) above, the sum of that profit and the total ascertained under paragraph (a)(ii) above is his adjusted profit for the period;
if there is a profit under paragraph (a)(i) above, the sum of that profit and the total ascertained under paragraph (a)(ii) above is his adjusted profit for the period;
if there is a loss under paragraph (a)(i) above smaller than the total ascertained under paragraph (a)(ii) above, the difference is his adjusted profit for the period; and
if there is a loss under paragraph (a)(i) above greater than the total so ascertained, the difference is his adjusted loss for the period ;
if there is a loss under paragraph (a)(i) above smaller than the total ascertained under paragraph (a)(ii) above, the difference is his adjusted profit for the period.
if the year comprises two chargeable periods then—
if for each of them he has an adjusted profit, the sum of those profits is his adjusted profit for the year;
if for one of them he has an adjusted profit and for the other an adjusted loss smaller than that profit, the difference is his adjusted profit for the year;
if for one of them he has an adjusted profit and for the other neither an adjusted profit nor an adjusted loss, that profit is his adjusted profit for the year;
in any other case, he has no adjusted profit for the year.
The accumulated capital expenditure of a participator in an oil field at the end of any chargeable period is the total amount of expenditure taken into account under section 2(9)(b)(i) and (c)(i) of this Act in computing the assessable profit or allowable loss accruing to him in that period and all earlier chargeable periods excluding all expenditure so taken into account which was not allowed as qualifying for supplement under section 2(9)(b)(ii) or (c)(ii).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In the case of any oil field the preceding provisions of this section shall have effect as if the calendar year which comprises the critical half year as defined in section 1(4) of this Act comprised the whole of the first chargeable period.
In computing under section 2 of this Act the gross profit or loss (if any) accruing to a participator in any chargeable period from an oil field— and in the following provisions of this section any oil which falls to be disregarded under this subsection is referred to as “excluded oil”.
any oil consisting of gas sold to the British Gas Corporation under a contract made before the end of June 1975 shall be disregarded; and
if at the end of that chargeable period the participator’s share, exclusive of oil falling within paragraph (a) above or used for production purposes, of the total amount of oil ever won and saved from the field does not exceed 5 per cent. of his share of the total amount of oil so falling which was ever so won and saved, his share of the oil won and saved from the field but not so falling shall also be disregarded;
Excluded oil shall be deemed not to be oil for the purposes of the following provisions of this Act, namely section 2(7) and (9), section 3 (except paragraphs (a) to (c) (hh), (i) and (j) of subsection (1) and subsections (1C) and (1D)) and section 4 (including, in the case of any expression used in any of those provisions which is defined elsewhere, its definition so far as it has effect for the purpose of that provision); and in computing under section 2 of this Act the licence debit or credit (if any) of a participator in an oil field for any chargeable period, any royalty repaid to him in the period in respect of excluded oil shall be disregarded.
Subsections (3A) to (3H) below apply where, in the case of any taxable field, the oil— includes oil falling within subsection (1)(a) above.
won and saved from the field, or
expected to be won and saved from the field,
Any expenditure allowable under section 3 of this Act for the field by virtue of any of paragraphs (a) to (c) of section 3(1) of this Act shall be a proportion of what it would otherwise have been.
A return made under paragraph 2 of Schedule 2 to this Act by a participator in an oil field need not, in the case of oil falling within subsection (1)(a) above, state the price received or receivable for the oil.
The proportion mentioned in subsection (3A) above is that which, according to estimates submitted to the OGA after the end of June 1975 and approved by it as reasonable, the field’s original reserves of oil exclusive of oil falling within subsection (1)(a) above bear to the field’s original reserves of oil inclusive of oil so falling.
For the purposes of this section 1,100 cubic metres of oil consisting of gas at the temperature and pressure mentioned in section 1(4) of this Act shall be counted as equivalent to one metric tonne of oil other than gas.
Until estimates have been submitted and approved for the purpose of subsection (3B) above, the expenditure allowable for the field under section 3 of this Act by virtue of section 3(1)(a), (b) or (c) of this Act shall be deemed to be nil.
Any expenditure allowable under section 3 of this Act for the field by virtue of section 3(1)(hh) of this Act shall be a portion of what it would otherwise have been.
That portion is determined in accordance with the following rules—
Identify the abandonment guarantee (within the meaning given by section 104 of the Finance Act 1991 (c. 31)) on the obtaining of which the expenditure was incurred.
Identify the liabilities covered by the guarantee.
Identify which of those liabilities relate to qualifying assets.
Identify the portion of the expenditure that it is just and reasonable to apportion to the liabilities identified under rule 3.
Identify the qualifying assets to which the liabilities identified under rule 3 relate.
Identify the use of those qualifying assets that has been (or is expected to be) non-excluded use.
Assume that expenditure is incurred on the provision of those qualifying assets and identify the proportion of the hypothetical expenditure that it would be just and reasonable to apportion to the use of those assets identified under rule 6.
The portion mentioned in subsection (3D) above is then determined by multiplying—
the portion identified under rule 4, by
the proportion (expressed as a fraction) identified under rule 7.
Any expenditure allowable under section 3 of this Act for the field by virtue of section 3(1)(i) or (j) of this Act shall be a portion of what it would otherwise have been.
That portion is determined in accordance with the following rules—
Identify the qualifying asset that is relevant to the incurring of the expenditure.
Identify the use of that qualifying asset that has been non-excluded use.
Assume that expenditure is incurred on the provision of that qualifying asset and identify the proportion of the hypothetical expenditure that it would be just and reasonable to apportion to the use of that asset identified under rule 2.
The portion mentioned in subsection (3F) above is then determined by multiplying—
the expenditure, by
the proportion (expressed as a fraction) identified under rule 3.
In subsections (3E) and (3G) above—
Section 1 of the Provisional Collection of Taxes Act 1968 shall apply to petroleum revenue tax ; and accordingly, in subsection (1) of that section after the words “income tax” there shall be inserted the words “ petroleum revenue tax ”.
In this Part of this Act—
" oil " means any substance won or capable of being won under the authority of a licence granted under either the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964, other than methane gas won in the course of operations for making and keeping mines safe;
a person who is or was at any time in that chargeable period a licensee in respect of any licensed area then wholly or partly included in the field ; and
in the case of a participator in that field must be made by the participator to the Board, . . . Where a claim under this Schedule has been made and the participator by whom it was made subsequently discovers that an error or mistake has been made in the claim, he may make a supplementary claim . . . The provisions of Schedule 5 to this Act specified in the first column of the following Table shall apply in relation to a claim under this Schedule as they apply in relation to a claim under that Schedule, subject to any modifications specified in the second column of that Table and with the substitution, for references to the responsible person, of references to the participator by whom the claim under this Schedule is made and, for references to section 3 or 4 of this Act, of references to section 5 or, as the case may be, section 5A or section 5B of this Act. Provisions applied Modifications Paragraph 2(6) 3(1) Omit paragraphs (b) and (c). 5(1) Omit the words from “or the amount” to “(1)(b) of that paragraph” and paragraph (b). 5(3) 5(4) For the reference to all or any of the participators substitute a reference to the participator by whom the claim is made. 5(5) — 6(1) For “one or both of the grounds” substitute “ the ground ”, and omit paragraph (b) and the words “or, as the case may be, claimed as so qualifying” (wherever occurring). 6(3) Omit “sub-paragraph (1)(b) or sub-paragraph (2)”, and for the words from “the corresponding” to “itself” substitute “ the appeal ”. 7 In sub-paragraph (1), omit the words from “or qualifies” to “2(9)(b)(ii) of this Act”. 8 In sub-paragraph (2), omit the words from “or allowed by it” to “section 2(9)(b)(ii) of this Act”. 9 .... In sub-paragraph (2) omit paragraphs (b) and (c) ..., in sub-paragraph (8) for the reference to all or any of the participators substitute a reference to the participator by whom the claim is made ....
" tax " or " the tax " means petroleum revenue tax.
carrying on drilling or production operations within the field; or
“the Board” means the Commissioners for Her Majesty's Revenue and Customs;
a person who is no longer a licensee in respect of any licensed area wholly or partly included in the field (and who does not fall within paragraph (aa) or (b) of this definition), but who has or had at any time in the relevant chargeable period a share of oil won (whether or not in that period) from the field, being a share with respect to any part of which either of the following conditions is or was satisfied at that time, that is to say— he has or had neither disposed of that part nor relevantly appropriated it; or he has or had disposed of, but not delivered, that part; and
the price received or receivable for the oil shall be deemed to be that for which it would have been sold, and
the oil shall be deemed to be delivered at the time it would have been delivered,
“royalty”, in relation to a participator in an oil field, means royalty payable (but not, it is hereby declared, oil delivered) to the Secretary of State under any relevant licence;
a person who— made a default payment in relation to the field (whether the person was then a current participator or former participator), is not a participator during the relevant chargeable period under any of paragraphs (a) to (f) of this definition, and receives, in either of the two chargeable periods preceding the relevant chargeable period, reimbursement expenditure (within the meaning of section 108(1)(c) of the Finance Act 1991) in respect of the default payment;
in the case of oil extracted in the United Kingdom, at the place of extraction; or
in the case of oil extracted from strata in the sea bed and subsoil of the territorial sea of the United Kingdom or of a designated area, at the place in the United Kingdom or, in the case of oil first landed in another country, at the place in that or any other countryat which the seller could reasonably be expected to deliver it or, if there is more than one such place, the one nearest to the place of extraction.
the Scottish Ministers, where the rights relate to oil in the Scottish onshore area, as defined in section 8A of the Petroleum Act 1998,
the Welsh Ministers, where the rights relate to oil in the Welsh onshore area (as defined in section 8A of the Petroleum Act 1998), or to confer on that person rights which are the same as, or similar to, those conferred by a licence;
the OGA, where the rights relate to oil elsewhere, to confer on that person rights which are the same as, or similar to, those conferred by a licence;
In the definition of “participator” in subsection (1)—
“cessation event”, in relation to an oil field to which a licence relates, means any of the following— and for the purposes of sub-paragraph (iv) “relevant area” means an area which is, or combination of areas each of which is, included in the oil field (whether or not such an area falls partly outside the oil field);
determination of the licence by the licensee,
revocation of the licence by the OGA , the Scottish Ministers , the Welsh Ministers or a Northern Ireland Department,
expiry of the licence at the end of its term,
the licensed area ceasing to include any relevant area whatsoever, by reason of the licensee surrendering the licence so far as it relates to the whole of the relevant area, and
the licence ceasing to apply to the oil field by reason of the operation of the licence;
“current participator”, “former participator” and “default payment” have the same meanings as in paragraph 2A of Schedule 5.
In this Part of this Act any reference to the use of an asset in connection with an oil field is a reference to its use in connection with that field for one or more of the purposes mentioned in section 3(1) of this Act (excluding section 3(1)(b)).
In this Part of this Act any reference (however worded) to the doing of anything in a chargeable period in connection with an oil field or with oil won from an oil field shall, as regards the first chargeable period for any oil field, be construed as including the doing of that thing in connection with the area of the field as subsequently determined under Schedule 1 to this Act or, as the case may be, with oil won from that area.
In so far as a person is a participator in an oil field by virtue of a licence under the Petroleum (Production) Act (Northern Ireland) 1964, references in this Part of this Act to the Secretary of State or the OGA (except references in Schedule 1) shall be construed in his case as references to the Department of Commerce for Northern Ireland.
Subsections (2) and (3) below apply where—
operating expenditure is incurred by a participator in an oil field during a chargeable period to which section 9(1) of this Act applies (“the relevant chargeable period”);
a claim for the allowance of the expenditure is made under Schedule 5 or 6 for the claim period which coincides with the relevant chargeable period (“the relevant claim period”); and
the claim is made more than four months after the end of the relevant claim period.
The Board shall not allow the expenditure except to such extent (if any) as they consider necessary to secure that the participator’s overall liability to tax is no greater than it would have been if the claim had been allowed before the Board had made an assessment to tax or a determination on or in relation to the participator in respect of the field for the relevant chargeable period.
Any amounts of oil allowance which, if the claim had been allowed before the Board had made an assessment to tax or a determination on or in relation to the participator in respect of the field for the relevant chargeable period, would not have been utilised by him in that period, or any subsequent chargeable period, shall be disregarded for the purposes of section 8(6) of this Act.
Where— subsections (2) and (3) above shall have effect as if references to the participator included references to that other person.
the participator transfers the whole or part of his interest in the oil field to another person; and
Parts II and III of Schedule 17 to the Finance Act 1980 apply to the transfer,
In this section—
in the case of oil won from the field that was so won from strata in the sea bed and subsoil of either the territorial sea of the United Kingdom or a designated area, pumping it to the place where it is first landed in the United Kingdom or to the place in the United Kingdom or another country at which the seller in a sale at arm’s length could reasonably be expected to deliver it or, if there is more than one place at which he could reasonably be expected to deliver it, the one nearest to the place of extraction; or
“the responsible person”, in relation to an oil field, has the meaning given by paragraph 4 of Schedule 2 to this Act;
Where a claim period is a period of twelve months, this section shall have effect as if—
that period were two separate claim periods of six months each;
any claim for that period under Schedule 5 or 6 were two separate claims, one for each of those separate periods; and
the operating expenditure to which that claim relates were apportioned between those separate periods and those separate claims in such manner as may be just and reasonable.
This section has effect for the purpose of determining the date on which any oil to which it applies is to be regarded for the purposes of this Part as delivered or relevantly appropriated.
This section applies to— if the condition in subsection (3)(a) or (b) below is met.
oil (not being light gases) won from a field and disposed of crude by a participator otherwise than in sales at arm's length, and
oil (not being light gases) so won and relevantly appropriated by a participator,
The condition is that the oil is or has been, or is to be,—
transported by ship from the place of extraction to a place in the United Kingdom or elsewhere, or
transported by pipeline to a place in the United Kingdom and loaded on to a ship there.
The date on which the oil is to be taken to be delivered, or (as the case may be) relevantly appropriated, by the participator is—
the date of completion of load, in a case where the condition in subsection (3)(a) above is met,
the date of the bill of lading, in a case where the condition in subsection (3)(b) above is met.
Where a person carries on as part of a trade— those activities shall be treated for all purposes of income tax, and for the purposes of the charge of corporation tax on income, as a separate trade, distinct from all other activities carried on by him as part of the trade.
any oil extraction activities ; or
any of the following activities, namely the acquisition, enjoyment or exploitation of oil rights ; or
activities of both those descriptions,
Relief in respect of a loss incurred by a person shall not be given under section 168 or 177(2) of the Taxes Act against income arising from oil extraction activities or from oil rights except to the extent that the loss arises from such activities or rights.
Subject to the following subsection, a capital allowance which is to be given by discharge or repayment of tax shall not to any extent be given effect under section 71 or 74 of the Capital Allowances Act 1968 by deduction from or set off against income arising from oil extraction activities or from oil rights.
The preceding subsection shall not apply to a capital allowance such as is there mentioned which falls to be made to a company for any accounting period in respect of an asset used in the relevant accounting period by a company associated with it and so used in carrying on oil extraction activities. For the purposes of this subsection the relevant accounting period is that in which the allowance in question first falls to be made to the company (whether or not it can to any extent be given effect in that period under section 74(1) of the Capital Allowances Act 1968).
On a claim for group relief made by a claimant company in relation to a surrendering company, group relief shall not be allowed against income of the claimant company arising from oil extraction activities or from oil rights except to the extent that the claim relates to losses incurred by the surrendering company that arose from such activities or rights.
Subsection (1) above shall have effect as regards chargeable periods beginning after 11th July 1974, subsections (2) and (5) above shall have effect as regards claims for relief in respect of chargeable periods so beginning, and subsection (3) above, with subsection (4), shall have effect as regards capital allowances falling to be made for chargeable periods so beginning; and in the case of a chargeable period beginning on or before and ending after 11th July 1974— and there shall be made all such apportionments as are necessary to give effect to paragraphs (a) to (c) above.
subsection (1) above shall have effect as regards the part of the period falling after that date ;
subsections (2) and (5) above shall have effect as regards the giving of relief against income attributable to that part of the period ; and
subsection (3) above, with subsection (4), shall have effect as regards deduction from or set off against income so attributable;
Where a person disposes of any oil in circumstances such that the market value of that oil at a particular time falls to be taken into account under section 2 of this Act (otherwise than by virtue of paragraph 6 of Schedule 3 thereto) in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to him in any chargeable period from an oil field (or would so fall but for section 10 of this Act), then for all purposes of income tax, and for the purposes of the charge of corporation tax on income, the disposal of the oil and its acquisition by the person to whom it was disposed of shall be treated as having been for a consideration equal to the market value of the oil as so taken into account under section 2 of this Act (or as would have been so taken into account under that section but for section 10 of this Act).
Where a person makes a relevant appropriation of any oil without disposing of it and does so in circumstances such that the market value of that oil at a particular time falls to be taken into account under section 2 of this Act in computing for the purposes of petroleum revenue tax the assessable profit or allowable loss accruing to him in any chargeable period from an oil field (or would so fall but for section 10 of this Act), then for all purposes of income tax, and for the purposes of the charge of corporation tax on income, he shall be treated as having, at the time of the appropriation— and as having so sold and bought it at a price equal to its market value as so taken into account under section 2 of this Act (or as would have been so taken into account under that section but for section 10 of this Act). In this subsection " relevant appropriation " has the meaning given in section 12(1) of this Act.
sold the oil in the course of the separate trade consisting of activities falling within section 13(1)(a) or (b) of this Act; and
bought it in the course of the separate trade consisting of activities not so falling,
Where a person disposes otherwise than in a sale at arm's length (as defined in paragraph 1 of Schedule 3 to this Act) of oil acquired by him in the course of oil extraction activities carried on by him or by virtue of oil rights held by him, then, if subsection (1) above does not apply in relation to the disposal, the following subsection shall apply in relation to it.
For all purposes of income tax, and for the purposes of the charge of corporation tax on income, the disposal of the oil and its acquisition by the person to whom it was disposed of shall be treated as having been for a consideration equal to the market value of the oil at the material time in the calendar month in which the disposal was made.
For the purposes of the preceding subsection "material time" and " calendar month" have the meaning given by paragraph 3(2) of Schedule 3 to this Act; and paragraph 2 of Schedule 3 to this Act (definition of market value of oil) shall apply for the purposes of the preceding subsection as it applies for purposes of Part I of this Act, but with the following modifications, that is to say—
for sub-paragraph (2)(c) there shall be substituted—; and
sub-paragraphs (3) and (4) shall be omitted.
Section 485 of the Taxes Act (sales etc. at undervalue or overvalue) shall not apply in relation to any transaction in relation to which subsection (1) or (4) above applies.
Section 248 of the Taxes Act (allowance of charges on income) shall have effect subject to the following provisions of this section.
Interest paid by a company shall not be allowable under the said section 248 as a deduction against that part of the profits of the company which consists of income arising from oil extraction activities or from oil rights except— Section 533 of the Taxes Act (connected persons), shall apply for the purposes of this subsection.
to the extent that it was payable in respect of money borrowed by the company which is shown to have been used to meet expenditure incurred by the company in carrying on oil extraction activities or in acquiring oil rights otherwise than from a connected person or to have been appropriated to meeting expenditure to be so incurred by the company ; and
in the case of interest paid by the company to a company associated with it, to the extent that (subject always to the preceding paragraph) the rate at which it was payable did not exceed what, having regard to all the terms on which the money was borrowed and the standing of the borrower, was a reasonable commercial rate.
Where a company pays to a company associated with it a charge on income not consisting of a payment of interest, the charge shall not be allowable to any extent under the said section 248 against that part of the profits of the first-mentioned company which consists of income arising from oil extraction activities or from oil rights.
The preceding provisions of this section— and there shall be made all such apportionments as are necessary to give effect to paragraph (b) above.
shall have effect as regards accounting periods beginning after 11th July 1974 ; and
in the case of an accounting period beginning on or before and ending after that date, shall have effect as regards the allowance of interest paid and other charges on income against income attributable to the part of the period falling after that date ;
Section 85 of the Finance Act 1972 (payments of advance corporation tax to be set against company's liability to corporation tax on its income) shall, as regards any distribution made by a company after 19th November 1974, have effect subject to the following provisions of this section.
Where advance corporation tax is paid by a company (" the distributing company") in respect of any distribution made by it to a company associated with it and resident in the United Kingdom— the corresponding amount of advance corporation tax which under that section the subsidiary is treated for the purposes of the said section 85 as having paid shall not be set against the subsidiary's liability to corporation tax on any income of the subsidiary arising from such activities or from oil rights.
that advance corporation tax shall not be set against the distributing company's liability to corporation tax on any income of the distributing company arising from oil extraction activities or from oil rights; and
if the benefit of any amount of that advance corporation tax is surrendered under section 92 of the Finance Act 1972 to a subsidiary of the distributing company,
Where in the case of any accounting period of a company there is an amount of advance corporation tax which because of subsection (2) above is not available to be set against the company's liability to corporation tax for that period on income of the company arising from oil extraction activities or from oil rights, subsection (2) of the said section 85 (limit on amount of advance corporation tax to be set against liability to corporation tax under subsection (1) of that section) shall as regards that period have effect as if the reference to the company's income charged to corporation tax for that period were a reference to the company's income so charged exclusive of income so arising.
Where a participator in an oil field has paid any petroleum revenue tax with which he was chargeable for a chargeable period, then, in computing for corporation tax the amount of his income arising in the relevant accounting period from oil extraction activities or oil rights, there shall be deducted an amount equal to that petroleum revenue tax ; and there shall be made all such adjustments of assessments to corporation tax as are required in order to give effect to this subsection. For the purposes of this subsection the relevant accounting period, in relation to any petroleum revenue tax paid by a company, is the accounting period of the company in or at the end of which the chargeable period for which that tax was charged ends.
If some or all of the petroleum revenue tax in respect of which a deduction has been made under subsection (1) above is subsequently repaid, that deduction shall be reduced or extinguished accordingly; and any additional assessment to corporation tax required in order to give effect to this subsection may be made at any time not later than six years after the end of the accounting period in which the first-mentioned tax was repaid.
Where, because of a deduction made under subsection (1) above in computing for corporation tax the amount of a company's income of any kind, the amount of advance corporation tax which can be set against the company's liability to corporation tax for an accounting period is less than the amount of advance corporation tax which could have been set against that liability if the deduction had not been made, then, if a claim in that behalf is made by the company not later than two years after the end of that accounting period, an amount of advance corporation tax equal to the difference shall be repaid to the company.
In this section the expressions " chargeable period ", " oil field " and " participator " have the same meaning as in Part I of this Act.
Where any amount of petroleum revenue tax paid by a participator in an oil field is, under any provision of Part I of this Act, repaid to him with interest, the amount of the interest paid to him shall be disregarded in computing the amount of his income for the purposes of corporation tax.
In this section " oil field " and " participator " have the same meaning as in Part I of this Act.
In this Part of this Act—
a former participator to whom an amount is attributed under paragraph 2A(2) of Schedule 5 in respect of a default payment made in relation to the field in the relevant chargeable period; and
“CTA 2010” means the Corporation Tax Act 2010;
“acquisition”, in relation to an asset, includes acquisition of an interest in the asset;
For the purposes of (d) in subsection (1) above—
the expressions " oil field " and " initial treatment" have the same meaning as in Part I of this Act; and
the definition of " initial storage " in section 12(1) above shall apply but, in its application for those purposes in relation to the person mentioned in (d) in subsection (1) above and to oil won from any one oil field, shall have effect as if the reference to the maximum daily production rate of oil for the field as there mentioned were a reference to that person's share of that maximum daily production rate, that is to say a share thereof proportionate to his share of the oil won from that field.
For the purposes of this Part of this Act two companies are associated with one another if— and section 258(8) of the Taxes Act shall apply for the purposes of paragraph (c) above.
one is a 51 per cent, subsidiary of the other ;
each is a 51 per cent, subsidiary of a third company ; or
one is owned by a consortium of which the other is a member;
Schedule 9 to this Act shall have effect for the purpose of extending section 485 of the Taxes Act (sales, etc. at undervalue or overvalue) in its application to transactions by petroleum companies and shall apply in relation to—
any transaction entered into after 31st December 1972; and
any transaction entered into on or before that date and carried out wholly or partly after that date, unless carried out within the twelve months beginning with the date on which it was entered into.
If and so far as the question in dispute on an appeal to the General Commissioners or, in Northern Ireland, to a county court against an assessment to tax made on a petroleum company as defined in the said Schedule 9 arises from a direction of the Board under the said section 485 and the assessment is for a chargeable period beginning after 31st December 1972, the question shall be referred to and determined by the Special Commissioners.
Subsection (2) above is without prejudice to any other provision requiring questions in dispute on appeals to the General Commissioners to be referred to and determined by the Special Commissioners.
This Act may be cited as the Oil Taxation Act 1975.
In this Act—
" the Board " means the Commissioners of Inland Revenue ;
" designated area " means an area designated by Order in Council under section 1(7) of the Continental Shelf Act 1964;
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Parts II and III of this Act, so far as they relate to income tax, shall be construed as one with the Income Tax Acts and, so far as they relate to corporation tax, shall be construed as one with the Corporation Tax Acts.
Except so far as the context otherwise requires, any reference in this Act to any enactment shall be construed as a reference to that enactment as amended, and as including a reference to that enactment as applied, by or under any other enactment, including this Act.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.
For the purposes of this Part of this Act an oil field is any area which the appropriate authority may determine to be an oil field, being an area of which every part is, or is part of, a licensed area. For the purposes of this Schedule the appropriate authority, in relation to any area— and any reference in this Schedule to the making of representations to the appropriate authority is, in a case falling within (c) above, a reference to the making of them to either the OGA or the said Department.
Before determining an area to be an oil field the appropriate authority— and the determination may be made either as proposed or with such modifications as appear to the authority to be appropriate after considering any representations made to the authority in accordance with this paragraph.
shall give notice in writing of the proposed determination to every person who is a licensee in respect of a licensed area wholly or partly included in that area and to any other licensee whose interests appear to the authority to be affected; and
shall consider any representations in writing which a person to whom a notice under this paragraph has been given may make to the authority within sixty days of receiving the notice,
A determination under this Schedule shall be in such form as the appropriate authority thinks fit and shall for purposes of identification assign to the field to which it relates a distinguishing number or other designation.
The appropriate authority shall give notice of any determination made by the authority under this Schedule to each of the persons to whom notice of the proposed determination was given.
A determination under this Schedule may from time to time be varied by a new determination thereunder made by the appropriate authority, and paragraphs 2 to 4 above shall apply to any such new determination.
This paragraph applies if an area has ceased to be— The area is to be treated as continuing to be— that it actually was. Accordingly, whilst the area is treated in accordance with sub-paragraph (2), any reference to an oil field is to include a reference to the area. Sub-paragraph (2) ceases to apply to the area— Sub-paragraph (2) ceases to apply to the area if, or to the extent that, it again becomes— Sub-paragraph (2) ceases to apply to the area at the end of the second chargeable period that falls after the chargeable period in which the area is decommissioned.
A relevant area is decommissioned for the purposes of paragraph 6 if all qualifying assets of the relevant area are decommissioned. If, and to the extent that, a UK offshore decommissioning regime applies to qualifying assets of the relevant area, those assets are decommissioned if— If, and to the extent that, a UK offshore decommissioning regime does not apply to qualifying assets of the relevant area, those assets are decommissioned if the Board are satisfied that they have been decommissioned. For the purposes of sub-paragraph (3) the Board must have regard to any obligations to decommission the qualifying assets which arise under the law applicable to those qualifying assets (whether the law of any part of the United Kingdom or of any other state or territory), including any obligations imposed by an authority having functions under that law in respect of such decommissioning. If sub-paragraph (3) applies (to any extent) to any qualifying assets, the Board must give the responsible person notice of any decision the Board make under that sub-paragraph. The responsible person may appeal against such a decision by notice in writing given to the Board within three months of the responsible person receiving the notice under sub-paragraph (5). An appeal under sub-paragraph (6) may, before it is notified to the tribunal, be abandoned by notice in writing given to the Board by the responsible person. The provisions of paragraphs 14A to 14I of Schedule 2 apply to appeals under sub-paragraph (6) subject to any necessary modifications. In this paragraph—
Section 1.
The tax shall be under the care and management of the Board; and the provisions of the Taxes Management Act 1970 specified in the first column of the following Table shall apply in relation to the tax as they apply in relation to a tax within the meaning of that Act, subject to any modifications specified in the second column of that Table and with the substitution, for references to Part IX of that Act or to the Taxes Acts, of references to this Part of this Act and, for references to chargeable periods within the meaning of that Act, of references to chargeable periods within the meaning of this Part of this Act. Provisions applied Modifications Section 1(3) . . . 33 . . . In subsection (3), after “assessments made on” insert “ or determinations made in relation to ”. In subsection (5), for the words following “profits” substitute “ means assessable profits. ” 34 36 . . . “ For the purposes of this section any fraud, wilful default or neglect committed at any time by a responsible person for an oil field in connection with or in relation to the tax shall be treated as having been committed on behalf of each of the participators in that field at that time. ” 47C — . . . . . . 48 49... 50(1)-(5) . . .. 51 . . . 52 . . . . . . 56 . . . Section 56 - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 In subsection (1), omit the words following “charged therewith”. 61 In subsection (1), omit the words from “distrain upon” to “is charged or”. 62(1) Omit “or which are payable for the year in which the seizure is made” and for “one year” and “one whole year” substitute “ two chargeable periods ”. (2) For “one whole year” substitute “ two chargeable periods ”. 63 64(1) For “one year” and “one whole year” substitute “ two chargeable periods ”. (2) For “one whole year” substitute “ two chargeable periods ”. 66 67 68 69 In paragraph (a), substitute a reference to section 68 as applied by this paragraph for the reference to the sections there specified. . . . . . . 89(2) For the reference to the rate or rates of interest prescribed by subsection (1) of that section substitute a reference to the rate of interest mentioned in paragraph 15 of this Schedule. (3) 90 98 . . . . . . Section 100C In subsection (1) omit the words after “penalty” . . . . . . . . . . . . . . . . . . . 101 For the reference to income or chargeable gains substitute a reference to assessable profits. 102 Section103(1) For the words from the beginning to “court -” substitute “ Where the amount of a penalty is to be ascertained by reference to tax payable by a person for any period , proceedings for the penalty may be commenced before the tribunal - ” (4) For the words from the beginning to “court,”substitute “ Proceedings for a penalty to which subsection (1) above does not apply may be commenced before the tribunal . ” 104 105 107(1)–(3) 108 In subsection (2), for the words from the beginning to “Acts” substitute “ The tax chargeable ”. 112 In subsection (1), after “assessment to tax” and “the assessment” insert “ or determination ” and after “duplicate of assessment to tax” and “duplicate of assessment” insert “ or of determination ”. 113(1A) (3) After “assessment” insert “ determination ” and after “notice of assessment” insert “ notice of determination ”. 114 After “assessment” wherever occurring insert “ or determination ”. 115(1)–(3) 118(1) (2) Any expression to which a meaning is given in this Part of this Act which is used in a provision of the Taxes Management Act 1970 applied by this paragraph shall, in that provision as so applied, have the same meaning as in this Part of this Act.
Every participator in a taxable field shall, for each chargeable period, prepare and, within two months after the end of the period or within such longer period as the Board may allow, deliver to the Board a return complying with the following provisions of this paragraph; but nothing in this sub-paragraph shall require a participator to deliver a return under this paragraph before 31st August 1975. A return under this paragraph for a chargeable period shall give the following information in relation to oil which is or was included in the participator’s share of any oil won from the taxable field (whether or not in that period), that is to say— Every participator in a taxable field shall, in the first return under this paragraph which he makes for that field, state whether any and, if any, how much expenditure to which section 5A or section 5B of this Act applies and which relates to, or to a licence for, any part of the field has been claimed under Schedule 7 to this Act— and subsection (7) of section 5 of this Act applies for the purposes of this sub-paragraph as it applies for the purposes of that section. A return under this paragraph for a chargeable period shall state— A return under this paragraph for a chargeable period shall— A return under this paragraph shall be in such form as the Board may prescribe and shall include a declaration that the return is correct and complete. The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power—
If a participator fails to deliver a return within the time allowed for doing so under paragraph 2(1) above he shall be liable, subject to sub-paragraph (3) below— If the failure continues after the end of six months from the time by which the return ought to have been delivered, the penalty under sub-paragraph (1)(a) above shall be an amount not exceeding the aggregate of £500 and the total amount of the tax with which the participator is charged for the chargeable period in question. Except in the case mentioned in sub-paragraph (2) above, the participator shall not be liable to any penalty incurred under this paragraph for failure to deliver a return if the failure is remedied before proceedings for the recovery of the penalty are commenced.
For each oil field a body corporate or partnership shall be appointed in accordance with this paragraph as the responsible person for that field to perform, in relation to the field, any functions conferred on it as such by this Part of this Act; and the body or partnership which for the time being holds that appointment is in this Part of this Act referred to as “the responsible person”. No body corporate shall be eligible for appointment as the responsible person for a taxable field unless it is resident in the United Kingdom, and no partnership shall be so eligible unless all its members are resident there. The participators in a taxable field shall, by notice in writing to the Board within the initial period, nominate a body corporate or a partnership for appointment as the responsible person for that oil field and, if the Board approve the nomination, the Board shall appoint that body or partnership as the responsible person and give it notice that it has been so appointed. If— the Board shall appoint one of the participators in the taxable field as the responsible person for the field and shall give notice to that participator that he has been so appointed. For the purposes of the preceding provisions of this paragraph, the initial period is the period of thirty days beginning with the latest date on which notice of determination of the taxable field is given to any of the participators under paragraph 4 of Schedule 1 to this Act. The Board may at any time, on the application of all the participators in a taxable field, appoint a body corporate or partnership nominated by the participators as the responsible person for that field in place of the body corporate or partnership which is the responsible person at that time, and shall give the body or partnership so appointed notice that it has been so appointed. The Board may, by notice in writing to the body corporate or partnership which is for the time being the responsible person for a taxable field, revoke the appointment of that body or partnership as the responsible person for that field; and where they do so the Board shall appoint one of the participators in the taxable field as the responsible person for that field and shall give notice to the participator that he has been so appointed. In this paragraph “participator”, in relation to a taxable field, means a person who is a licensee in respect of any licensed area wholly or partly included in the field.
The responsible person for a taxable fieldshall, for each chargeable period, prepare and, within one month after the end of the period or within such longer period as the Board may allow, deliver to the Board a return for that period complying with sub-paragraphs (2) and (3) below; but nothing in this sub-paragraph shall require the responsible person to deliver a return under this paragraph before 31st July 1975. A return under this paragraph for a chargeable period shall— The reference in sub-paragraph (2)(d) above to particulars of or relating to the field includes a reference to particulars required for determining the amount by which any qualifying tariff receipts, within the meaning of section 9 of the Oil Taxation Act 1983, are to be treated as reduced by virtue of that section. If in any chargeable period oil won from the taxable field is mixed as mentioned in section 63 of the Finance Act 1987 so as to give rise to blended oil, within the meaning of that section, then, as respects that chargeable period, for paragraph (a) of sub-paragraph (2) above there shall be substituted the following paragraph—. A return under this paragraph shall be in such form as the Board may prescribe and shall include a declaration that the return is correct and complete. The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power—
If the responsible person fails to deliver a return within the time allowed for doing so under paragraph 5(1) above he shall be liable— The responsible person shall not be liable to any penalty incurred under sub-paragraph (1) above for failure to deliver a return if the failure is remedied before proceedings for the recovery of the penalty are commenced.
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Where it appears to the Board that, in accordance with the provisions of this Part of this Act, an assessable profit has accrued to a participator in a chargeable period from a taxable field, they shall make an assessment to tax on the participator and shall give him notice of the assessment. An assessment under sub-paragraph (1) may be made at any time not more than 4 years after the end of the chargeable period to which it relates (subject to paragraphs 12A , 12B and 13E ). Where it appears to the Board that, in accordance with those provisions, an allowable loss has accrued to a participator in a chargeable period from a taxable field, they shall make a determination that the loss is allowable to the participator and shall give him notice of the determination. Where it appears to the Board that, in accordance with those provisions, neither an assessable profit nor an allowable loss has accrued to a participator in a chargeable period, they shall make a determination to that effect and shall give him notice of the determination. A notice of assessment for a chargeable period shall state the amount of any allowable losses which, in accordance with those provisions, have been set against the assessable profit for that period. A notice of assessment or determination shall state that the participator may appeal against the assessment or determination in accordance with paragraph 14 below. After the service of the notice of assessment or the notice of determination the assessment or determination, as the case may be, shall not be altered except in accordance with the express provisions of this Part of this Act (including the provisions applied by paragraph 1 above).
Where a participator has under paragraph 2 above delivered to the Board a return for a chargeable period and the Board are satisfied that the information given in the return is correct in so far as it is material for the purpose of computing his assessable profit or allowable loss (if any) for that period, the Board shall (in so far as the computation falls to be made by reference to the matters dealt with in the return) make the assessment or determination under paragraph 10 above in accordance with the return. Where the Board are not so satisfied in relation to a participator’s return or a participator fails to deliver to the Board a return for a chargeable period as required by paragraph 2 above, the Board shall, in so far as the computation of his assessable profit or allowable loss (if any) for that period falls to be made by reference to the matters which were dealt with in the return or, as the case may be, ought to have been dealt with in a return, make the assessment or determination under paragraph 10 above to the best of their judgment. Nothing in sub-paragraph (2) above or in paragraph 5 above shall be taken, in a case where the participator has delivered a return as to which the Board are not satisfied as mentioned in sub-paragraph (1) above, to prevent the Board from basing their assessment or determination on the participator’s having had an interest in oil won and saved from the field different from that on which he based his return.
Where it appears to the Board— the Board may make such assessments or determinations or such amendments of assessments or determinations as may be necessary; and where the Board exercise any of their powers under this paragraph in relation to a chargeable period, they may make such assessments or determinations or amendments of assessments or determinations for other chargeable periods as may be necessary in consequence of the exercise of those powersand “taxable field” and “non-taxable field” have the same meaning as in Part III of the Finance Act 1993. An assessment (or an amendment of an assessment) under sub-paragraph (1) may be made at any time not more than 4 years after the end of the chargeable period to which the assessment relates (subject to sub-paragraph (1B) and paragraphs 12A and 12B). The time limits in sub-paragraph (1A) and paragraphs 12A and 12B do not apply to an amendment of an assessment where the amendment is made in consequence (directly or indirectly) of— Where under sub-paragraph (1) above it appears to the Board that the assessable profit for a chargeable period ought to have been larger and that the deficiency resulted from an excessive allowable loss accruing in a subsequent period having been set against the profit for that period, the Board may ... make a further assessment by virtue of sub-paragraph (1) above at any time not later than 4 years after the end of the chargeable period in which the allowable loss accrued (subject to paragraphs 12A and 12B) . Where under this paragraph the Board make an assessment or determination or amend an assessment or determination they shall give notice thereof to the participator concerned; and sub-paragraphs (4), (5) and (6) of paragraph 10 above shall apply in relation to any such assessment, determination or amendment as they apply in relation to an assessment or determination under that paragraph.
Where— the period within which the Board may make an assessment under this Schedule for that chargeable period shall not expire before the end of the period of 4 years beginning with the relevant time. In this paragraph “the relevant time” means the earlier of—
In a case involving a relevant situation brought about carelessly by a participator (or a person acting on behalf of a participator), an assessment (or an amendment of an assessment) under this Schedule on the participator may be made at any time not more than 6 years after the end of the relevant chargeable period (subject to sub-paragraph (2) and (2A) ). In a case involving a relevant situation brought about deliberately by a participator (or a person acting on behalf of a participator), an assessment (or an amendment of an assessment) on the participator may be made at any time not more than 20 years after the end of the relevant chargeable period. In a case involving a relevant situation brought about by arrangements which were expected to give rise to a tax advantage in respect of which a participator (or a person acting on behalf of a participator) was under an obligation to notify the Board under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so, an assessment (or an amendment of an assessment) on the participator may be made at any time not more than 20 years after the end of the relevant chargeable period. “Relevant situation” means a situation in which— “Relevant chargeable period” means— Where the participator carried on a trade or business with one or more other persons at any time in the chargeable period for which the assessment under sub-paragraph (1) , (2) or (2A) is made, an assessment to tax in respect of the profits of that trade or business may also be made on any of the participator's partners. In determining the amount of the tax to be charged on a person for a chargeable period in an assessment in a case mentioned in sub-paragraph (1) , (2) or (2A) (including an assessment under sub-paragraph (5)), effect must be given to any relief or allowance to which that person would have been entitled for that period if a valid claim or application had been made. Sub-paragraph (6) only applies if the person on whom the assessment is made so requires. Subsections (5) to (7) of section 118 of the Taxes Management Act 1970 (losses and situations brought about carelessly or deliberately) apply for the purposes of this paragraph as they apply for the purposes of that Act. In subsection (6)(b) of that section (as it applies for the purposes of this paragraph), the reference to the person who provides the information has effect as if it included any person who becomes the responsible person for the oil field after the information is provided.
Subject to paragraph 14 below, the tax charged in an assessment made on a participator for any chargeable period and payable shall be due within six months after the end of that chargeable period or, if later, thirty days after the date of issue of the notice of assessment; but no tax shall be payable by virtue of this paragraph before 30th April 1976.
A participator may appeal ... against an assessment or determination or an amendment of an assessment or determination made on or in relation to him by notice of appeal in writing given to HMRC within thirty days after the date of issue of the notice of assessment or determination or of the notice of the amendment. A participator who has made a claim under paragraph 13A may appeal from the decision on the claim by notice in writing given to HMRC within 30 days after the date of issue of the notice of the decision. The notice of appeal must specify the grounds of appeal. A participator who has given notice of appeal under sub-paragraph (1) above against an assessment charging him with any tax for a chargeable period may, if he delivered a return for that period as required by paragraph 2 above, withhold, until the determination or abandonment of the appeal, so much of the tax charged in the assessment as is the smaller of— Subject to sub-paragraph (5) below, where the market value of all the oil for which a market value is stated in the participator’s return is, as stated in that return, less than the value which is produced for that oil by applying to it the average price mentioned in sub-paragraph (6) below, sub-paragraph (3) above shall have effect as if, for the reference to the market value of oil as so stated, there were substituted a reference to the value which is so produced for that oil. The comparison of values and the substitution required by sub-paragraph (4) above shall, in the case of an appeal by a participator whose return relates both to gas and to other oil, be made separately for the gas and for the other oil. The average price referred to in sub-paragraph (4) above is the average price at which all oil included in the relevant returns as oil delivered in the period covered by the returns and disposed of in sales at arm’s length was so disposed of. The relevant returns for the purposes of sub-paragraph (6) above are all the returns of all the participators in all oil fields which— The participator may at any time, if HMRC do not object to his doing so, abandon an appeal instituted by him; and for this purpose he shall notify his desire to do so to HMRC who may, within thirty days after being so notified, object by notice in writing to the participator. Where, at any time between— HMRC and the participator agree on how the assessment, determination, amendment or decision should be varied or on what assessment or determination should be substituted in relation to the chargeable period in question, the same consequences shall ensue as if the tribunal had determined the appeal to that effect. If an appeal under sub-paragraph (1) is notified to the tribunal and it appears to the tribunal that the assessment, determination or amendment is wrong— the tribunal shall vary the assessment, determination or amendment in such manner, or substitute such assessment or determination, as may be required; and it shall be for the participator to satisfy the tribunal as to any matter within paragraph (a) above. If an appeal under sub-paragraph (1A) is notified to the tribunal and it appears to the tribunal that the decision is wrong, the tribunal shall substitute such decision as may be required. When an appeal is notified to the tribunal, the decision of the tribunal on the appeal is final and conclusive. But sub-paragraph (11) is subject to—
This paragraph applies where— The participator may make a claim to the Commissioners for Her Majesty's Revenue and Customs (“HMRC”) for repayment or discharge of the amount. Paragraph 13B makes provision about cases in which HMRC are not liable to give effect to a claim under this paragraph. Paragraphs 13C to 14I make further provision about making and giving effect to claims under this paragraph. Paragraph 13F makes provision about the application of this paragraph and paragraphs 13B to 13E to amounts paid under contract settlements. HMRC are not liable to give relief in respect of a case described in sub-paragraph (1)(a) or (b) except as provided— For the purposes of this paragraph and paragraphs 13B to 13F, an amount paid by one person on behalf of another is treated as paid by the other person. In this paragraph and paragraphs 13B to 13F, “the Oil Taxation Acts” means—
HMRC are not liable to give effect to a claim under paragraph 13A if or to the extent that the claim falls within a case described in this paragraph. Case A is where the amount paid, or liable to be paid, is excessive by reason of— Case B is where the participator— Case C is where the participator— Case D is where the claim is made on grounds that— Case E is where the participator knew, or ought reasonably to have known, of the grounds for the claim before the latest of the following— Case F is where the amount in question was paid or is liable to be paid— Case G is where— Case G does not apply where the amount paid, or liable to be paid, is tax which has been charged contrary to EU law. For the purposes of sub-paragraph (9), an amount of tax is charged contrary to EU law if, in the circumstances in question, the charge to tax is contrary to—
Subject to sub-paragraph (2) below, tax charged in an assessment for a chargeable period shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from two months after the end of the period until payment. Nothing in sub-paragraph (1) above shall authorise or require interest to be charged from any time before 30th April 1976. Where, under paragraph 14(3) above, tax may be withheld until the determination or abandonment of an appeal, the interest on that tax may also be withheld until the determination or abandonment of the appeal.
Subject to paragraph 17 below where any amount of tax charged by an assessment to tax or paid on account of tax so charged becomes repayable under any provision of this Part of this Act that amount shall carry interest at the rate applicable under section 178 of the Finance Act 1989from— whichever is the later, until the order for repayment is issued.
two months after the end of the chargeable period for which the assessment was made; or
the date on which it was paid,
This paragraph applies where— In the following provisions of this paragraph, so much of the repayment of tax referred to in sub-paragraph (1)(c) above as is attributable to giving effect to the relief for losses carried back is referred to as “the appropriate repayment” and, in relation to the appropriate repayment, the chargeable period for which the relevant assessment or amendment is made is referred to as “the repayment period”. For the purpose of determining the amount of the appropriate repayment in a case where the relevant assessment or amendment not only gives effect to the relief for losses carried back but also takes account of any other matter (whether a relief or not) which goes to reduce the assessable profit of the period in question or otherwise to reduce the tax payable for that period, the amount of the repayment which is attributable to the relief for losses carried back is the difference between)— Subject to sub-paragraph (6) below Where this paragraph applies, the amount of interest which, by virtue of paragraph 16 above which is treated as reducing the assessable profit of the repayment period, is carried by the appropriate repayment shall not exceed the difference between— For the purposes of sub-paragraph (4)(a) above— If, in order to give effect to the relief for losses carried back, a repayment of APRT falls, or will on the making of a claim fall, to be made with respect to a chargeable period which is the repayment period in relation to the appropriate repayment, the reference in sub-paragraph (4)(b) above to the appropriate repayment shall be construed as a reference to the aggregate of that repayment and the repayment of APRT. In sub-paragraph (6) above “APRT” means advance petroleum revenue tax paid under Chapter II of Part VI of the Finance Act 1982.
A claim under paragraph 13A may not be made more than 4 years after the end of the relevant chargeable period. In relation to a claim made in reliance on paragraph 13A(1)(a), the relevant chargeable period is— In relation to a claim made in reliance on paragraph 13A(1)(b), the relevant chargeable period is — A claim under paragraph 13A must be in such form as the HMRC may prescribe.
HMRC must—
make a decision on the claim, and
by notice inform the participator of their decision.
This paragraph applies where— Where this paragraph applies— A claim is not finally determined until it, or the amount to which it relates, can no longer be varied (whether on appeal or otherwise).
In paragraph 13A(1)(a) the reference to an amount paid by a participator by way of tax includes an amount paid by a person under a contract settlement in connection with tax believed to be due. Sub-paragraphs (3) to (6) apply if the person who paid the amount under the contract settlement (“the payer”) and the person from whom the tax was due (“the taxpayer”) are not the same person. In relation to a claim under paragraph 13A in respect of that amount— Sub-paragraph (5) applies where the grounds for giving effect to a claim by the payer in respect of the amount also provide grounds for making an assessment or determination under paragraph 10 or 12, or an amendment of such an assessment or determination, on the taxpayer in respect of any chargeable period. HMRC may set any amount repayable to the payer by virtue of the claim against any amount payable by the taxpayer by virtue of the assessment, determination or amendment. The obligations of HMRC and the taxpayer are discharged to the extent of any set-off under sub-paragraph (5). “Contract settlement” means an agreement made in connection with any person's liability to make a payment to HMRC under or by virtue of an enactment.
This paragraph applies if notice of appeal has been given to HMRC. In such a case— See paragraphs 14G and 14H for provision about notifying appeals to the tribunal after a review has been required by the participator or offered by HMRC. This paragraph does not prevent the matter in question from being dealt with in accordance with paragraph 14(9).
Sub-paragraphs (2) and (3) apply if the participator notifies HMRC that the participator requires HMRC to review the matter in question. HMRC must, within the relevant period, notify the participator of HMRC’s view of the matter in question. HMRC must review the matter in question in accordance with paragraph 14E. The participator may not notify HMRC that the participator requires HMRC to review the matter in question and HMRC shall not be required to conduct a review if— In this paragraph “relevant period” means—
Sub-paragraphs (2) to (5) apply if HMRC notify the participator of an offer to review the matter in question. When HMRC notify the participator of the offer, HMRC must also notify the participator of HMRC’s view of the matter in question. If, within the acceptance period, the participator notifies HMRC of acceptance of the offer, HMRC must review the matter in question in accordance with paragraph 14E. If the participator does not give HMRC such a notification within the acceptance period, HMRC’s view of the matter in question is to be treated as if it were contained in an agreement in writing under paragraph 14(9) for the settlement of that matter. Sub-paragraph (4) does not apply to the matter in question if, or to the extent that, the participator notifies the appeal to the tribunal under paragraph 14H. HMRC may not notify the participator of an offer to review the matter in question (and, accordingly, HMRC shall not be required to conduct a review) if— In this paragraph “acceptance period” means the period of 30 days beginning with the date of the document by which HMRC notify the participator of the offer to review the matter in question.
This paragraph applies if notice of appeal has been given to HMRC. The participator may notify the appeal to the tribunal. If the participator notifies the appeal to the tribunal, the tribunal is to decide the matter in question. Sub-paragraphs (2) and (3) do not apply in a case where— In a case falling within sub-paragraph (4)(a) or (b), the participator may notify the appeal to the tribunal, but only if permitted to do so by paragraph 14G or 14H.
This paragraph applies if HMRC are required by paragraph 14B or 14C to review the matter in question. The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances. For the purpose of sub-paragraph (2), HMRC must, in particular, have regard to steps taken before the beginning of the review— The review must take account of any representations made by the participator at a stage which gives HMRC a reasonable opportunity to consider them. The review may conclude that HMRC’s view of the matter in question is to be— HMRC must notify the participator of the conclusions of the review and their reasoning within— In sub-paragraph (6) “relevant day” means— Where HMRC are required to undertake a review but do not give notice of the conclusions within the time period specified in sub-paragraph (6), the review is to be treated as having concluded that HMRC’s view of the matter in question (see paragraphs 14B(2) and 14C(2)) is upheld. If sub-paragraph (8) applies, HMRC must notify the participator of the conclusion which the review is treated as having reached.
This paragraph applies if HMRC give notice of the conclusions of a review (see paragraph 14E(6) and (9)). The conclusions are to be treated as if they were an agreement in writing under paragraph 14(9) for the settlement of the matter in question. Sub-paragraph (2) does not apply to the matter in question if, or to the extent that, the participator notifies the appeal to the tribunal under paragraph 14G.
This paragraph applies if— The participator may notify the appeal to the tribunal within the post-review period. If the post-review period has ended, the participator may notify the appeal to the tribunal only if the tribunal gives permission. If the participator notifies the appeal to the tribunal, the tribunal is to determine the matter in question. In this paragraph “post-review period” means—
This paragraph applies if— The participator may notify the appeal to the tribunal within the acceptance period. But if the acceptance period has ended, the participator may notify the appeal to the tribunal only if the tribunal gives permission. If the participator notifies the appeal to the tribunal, the tribunal is to determine the matter in question. In this paragraph “acceptance period” has the same meaning as in paragraph 14C.
In paragraphs 14A to 14H— In paragraphs 14A to 14H, a reference to the participator includes a person acting on behalf of the participator except in relation to— But if a notification falling within sub-paragraph (2) is given to the participator, a copy of the notification may also be given to a person acting on behalf of the participator.
Section 1.
For the purposes of this Part of this Act a sale of any oil is a sale at arm’s length if, but only if, the following conditions are satisfied with respect to the contract of sale, that is to say— Section 1122 of CTA 2010 (connected persons) shall apply for the purposes of the preceding sub-paragraph.
Except in the case of light gases the market value of any particular quantity of oil of any kind on any day shall be determined for the purposes of this Part of this Act in accordance with this paragraph and, accordingly, references in the following provisions of this paragraph to oil do not apply to light gases. This paragraph makes different provision according to whether the oil is— For the purposes of this Act— The Board may specify oil of any particular kind as Category 1 oil only if they are satisfied that reports of prices for sales of oil of that kind are published and widely available (whether or not on payment of a fee). The market value of any particular quantity of Category 1 oil of any kind is the price for which that quantity of oil of that kind might reasonably have been expected to be sold under a contract of sale that meets the following conditions— The terms as to payment which are to be implied in the contract are those which are customarily contained in contracts for the sale at arm's length of oil of the kind in question. The market value of any particular quantity of Category 2 oil of any kind is the price for which that quantity of oil of that kind might reasonably have been expected to be sold under a contract of sale that meets the following conditions— The terms as to payment which are to be implied in the contract are those which are customarily contained in contracts for the sale at arm's length of oil of the kind in question. For the purposes of sub-paragraph (2) or (2AA) above, the price of any quantity of Category 1 or Category 2 oil of any kind shall be determined in such manner, on the basis of such information, and by reference to such factors, as may be prescribed for oil of that Category and kind in regulations made by the Board. The provision that may be made by regulations under subsection (2E) above includes provision for or in connection with any or all of the following— Sub-paragraph (2I) below has effect if, or in so far as, the Board are satisfied that it is impracticable or inappropriate to determine for the purposes of sub-paragraph (2) or (2AA) above the price of any oil in accordance with the provisions of regulations for the time being in force under sub-paragraph (2E) above. For that purpose it is immaterial whether the impracticability or inappropriateness is by virtue of— or for any other reason. Where this sub-paragraph has effect, the price is to be determined— . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Where all or any of the oil whose market value falls to be ascertained in accordance with sub-paragraph (1) and sub-paragraph (2) or (2AA) above has been subjected to initial treatment before being disposed of or relevantly appropriated, the appropriate initial treatment referred to in sub-paragraph (2)(d) or (2AA)(d) above shall, as respects that oil, include the whole of that treatment. The provisions of sub-paragraphs (2) and (2AA) above shall apply for the ascertainment of the market value of oil in any case mentioned in paragraph 2(2) of Schedule 2 to this Act as they apply in relation to the corresponding case mentioned in those provisions. In this paragraph “prescribed” means specified in, or determined in accordance with, regulations.
Paragraph 2 above shall have effect in accordance with this paragraph where the oil whose market value falls to be ascertained at any time in accordance with sub-paragraphs (1) to (2I) of that paragraph ... consists of or includes gas. Sub-paragraphs (2) and (3) below also apply where the market value of any light gases falls to be ascertained under paragraph 3A below. Sub-paragraph (2)(d) or (as the case may be) (2AA)(d) of paragraph 2 above or, as the case may require, sub-paragraph (2)(b) of paragraph 3A below shall not apply to so much of the oil as consists of gas unless— and where oil consisting of gas has, whether before or after being disposed of or relevantly appropriated, been subjected to initial treatment by or on behalf of the participator in question or by or on behalf of a person who is connected with him as aforesaid the appropriate initial treatment referred to in sub-paragraph (2)(d) or (2AA) of paragraph 2 above or, as the case may require, sub-paragraph (2)(b) of paragraph 3A belowshall include the treatment to which it has been so subjected. Where the initial treatment mentioned in sub-paragraph (2) or (2AA) above includes treatment in order to separate gas of one or more kinds which are transported and sold in normal commercial practice, the market value of the gas of each such kind which is separated shall be ascertained in accordance with sub-paragraphs (1) to (2I) of paragraph 2 or, as the case may require, in accordance with paragraph 3A below as if that were the only oil whose market value fell to be ascertained at the time in question .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This paragraph has effect for determining, for the purposes of this Schedule, the day which is the “notional delivery day” in the case of any particular quantity of oil of any particular kind whose market value falls to be determined in accordance with the provisions of this Schedule in the case of any chargeable period. The notional delivery day need not be a day in the chargeable period. In the case of a quantity of oil which, at the end of the chargeable period,— the notional delivery day is the last business day of the chargeable period. In the case of— the notional delivery day is to be determined in accordance with sub-paragraphs (5) to (7) below. If that oil is— and there is a loading slot for it (see sub-paragraph (8)), the notional delivery day is the middle day of the loading slot. If sub-paragraph (5) above does not apply to that oil, then— The Treasury may by regulations make provision for or in connection with substituting as the notional delivery day in such circumstances as may be prescribed— The “loading slot” for any oil is the period of three days within which the loading of the oil on to the ship is or was to take place— In sub-paragraph (8) above, “duly” means in accordance with the arrangements for the time being governing the time and manner of— and, in any case, before the end of the calendar month immediately preceding that in which loading is to take place. If the Treasury consider that, for the purpose of defining “loading slot”, any period of days for the time being specified by or under this Act as the period of days within which loading of oil on to a ship is to take place is, or is to be, no longer appropriate, they may by regulations make provision for, or in connection with,— The power conferred by this sub-paragraph includes power to make amendments to, or modifications of, this Schedule.
For the purposes of subsection (5) of section 2 of this Act, the aggregate market value of any oil falling within paragraph (b) or (c) of that subsection is arrived at as follows. In the case of oil falling within paragraph (b) of that subsection and delivered as there mentioned in the chargeable period in question— In the case of oil falling within paragraph (c) of that subsection and appropriated as there mentioned in the chargeable period in question—
Oil delivered to the OGA under the terms of a licence granted under Part I of the Petroleum Act 1998shall be disregarded for the purposes of section 2(5) of this Act and for the purposes of the references in section 8(3) and (4) of this Act to a participator’s share of the oil won and saved from an oil field in a chargeable period.
The market value of any light gases for the purposes of this Part of this Act is the price at which, having regard to all the circumstances relevant to the disposal or appropriation in question, light gases of that kind might reasonably have been expected to be sold under a contract of sale satisfying the conditions specified in sub-paragraph (2) below. The conditions referred to in sub-paragraph (1) above are that— If the circumstances referred to in sub-paragraph (1) above are such that the price referred to in that sub-paragraph might reasonably be expected to include— section 114 of the Finance Act 1984 shall apply accordingly in relation to the notional contract specified in sub-paragraph (1) above as it applies in relation to an actual contract. The circumstances referred to in sub-paragraph (1) above include— This paragraph has effect subject to sub-paragraphs (2) and (3) of paragraph 2A above.
This paragraph applies to any agreement or other arrangement between a participator in an oil field and a company associated with the participator whereby— As regards any chargeable period in which a participator in an oil field is a party to an arrangement to which this paragraph applies, the other party to the arrangement shall be treated for all purposes of this Part of this Act (except this paragraph) and for the purposes of sections 299 to 301 of CTA 2010 as having been a participator in the field at all times when the actual participator was such a participator (including times before the arrangement was made), and shall be assessable and chargeable to tax and entitled to make any claim under this Part of this Act, and any deduction or claim under sections 299 to 301 of CTA 2010, accordingly. Where a participator in an oil field is or has been a party to an arrangement to which this paragraph applies then for all purposes of this Part of this Act— Where a participator in an oil field is or has been a party to an arrangement to which this paragraph applies, then, if any tax or interest payable under this Part of this Act by the other party to the arrangement is not paid within thirty days after the date on which it becomes payable, the Board may by notice in writing require the participator to pay that tax or interest; and where such a notice is served on the participator, the tax or interest in question shall be payable by him forthwith, but without prejudice to the Board’s right to recover it from the other party. For the purposes of this paragraph “company” means any body corporate, and a participator in an oil field and another company are associated with one another if— and in this sub-paragraph “control” has the meaning given by section 1124 of CTA 2010.
Where a proportion of a participator’s share in the oil won and saved from an oil field (as distinct from a specific quantity of oil comprised in that share) is owned by a person (in this paragraph referred to as “the owner”) who is not a participator and who acquired it (whether directly or indirectly) under an agreement to which paragraph 5 above does not apply, the following provisions of this paragraph shall have effect. For the purposes of this Part of this Act the oil acquired by the owner under the agreement shall be treated in every case as having been disposed of to him by the participator otherwise than in a sale at arm’s length. Where any oil which the owner owns in right of the agreement is in pursuance of the agreement— the delivery shall for the purposes of this Part of this Act be regarded as a delivery by the participator although he does not own the oil. This sub-paragraph applies to all such oil (if any) as, being owned by the owner in right of the agreement, is in any chargeable period delivered by the participator as mentioned in the preceding sub-paragraph and would accordingly, apart from the following sub-paragraph, fall to be brought into account under section 2(5)(b) of this Act in computing the assessable profit or allowable loss accruing to the participator in that period (in the following sub-paragraph referred to as “the relevant period”). If on a claim made by the participator within two months after the end of the relevant period— then, in computing the assessable profit or allowable loss accruing to the participator in the relevant period, the oil with respect to which it is so shown shall be brought into account by reference to the price received or receivable for it by the owner instead of by reference to its market value.
In computing the assessable profit or allowable loss accruing to a participator in a chargeable period from an oil field, the market value of any oil won as mentioned in section 3(1)(f) of this Act—
shall not be taken into account under section 2(4)(b) of this Act if and to the extent that at the end of the preceding chargeable period the oil was in the course of being transported to the place where it was first landed in the United Kingdom or to the place referred to in section 3(1)(f)(ii) of this Act; and
shall not be taken into account under section 2(5)(d) of this Act if and to the extent that at the end of the first-mentioned chargeable period the oil was in the course of being so transported.
Expenditure shall not be regarded for any of the purposes of this Part of this Act as having been incurred by any person in so far as it has been or is to be met directly or indirectly by the Crown or by any government or public or local authority, whether in the United Kingdom or elsewhere, or by any person other than the first-mentioned person, unless it is so met by a grant made under Part I of the Industry Act 1972 or a grant made under an enactment of the Parliament of Northern Ireland or Measure of the Northern Ireland Assembly and declared by order of the Treasury under section 84 of the Capital Allowances Act 1968 to correspond to a grant made under the said Part I. But sub-paragraph (1) above does not apply to any expenditure for which the relevant participator is liable that has been or is to be met directly or indirectly out of a payment made by the guarantor under an abandonment guarantee. In sub-paragraph (1A) above— In considering, for the purposes of this paragraph, how far any expenditure has been or is to be met directly or indirectly by the Crown or by any authority or person other than the person incurring the expenditure, there shall be left out of account any insurance or compensation payable in respect of the loss or destruction of any asset. This paragraph is subject to paragraph 11A (transfers of interests in oil fields: post-transfer decommissioning expenditure).
Where the whole or part of the share of a participator (“the transferor”) of oil won from an oil field became the share, or part of the share, of another participator (“the transferee”) in pursuance of an agreement between them under which the transferor undertook to remain responsible for carrying out the transferee’s obligations in connection with the field so far as they relate to the transferred share or part, then, for the purposes of this Part of this Act—
the shares of the transferor and the transferee of oil won from the field shall be taken to be the same as they would have been if the transfer had not occurred, and
any oil comprised in the transferred share or part and taken up by or on the authority of the transferee in pursuance of the agreement shall be regarded as being disposed of and delivered to him by the transferor at the time when it is taken up.
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Where— then, if the Board so direct, the reduction made under that subsection for that chargeable period shall be only what it would have been if the expenditure and other amounts allowed on the claim had been claimed before and allowed at the relevant time. In this paragraph “the relevant time” means the end of twelve months from the end of the claim period to which the claim mentioned in sub-paragraph (a) above relates.
a claim under Schedule 5 or 6 to this Act is made after the relevant time; and
the reduction which would, apart from this paragraph, fall to be made under subsection (1) of section 8 of this Act for any chargeable period is greater than it would have been if the expenditure and other amounts allowed on the claim had been claimed before and allowed at the relevant time,
This paragraph applies if— Paragraph 8(1) (certain subsidised expenditure to be disregarded) does not apply to any decommissioning expenditure that— Sub-paragraph (4) applies if, at the end of the transfer period, the old participator is no longer a licensee or a participator in respect of any licensed area wholly or partly included in the oil field. Decommissioning expenditure that is incurred by the old participator, after the end of the transfer period, is to be treated for the purposes of this Act as having been incurred by the new participator (and paragraph 8(1) does not apply to any such expenditure). If the old participator has transferred the whole or part of another interest in the oil field to the new participator, but the condition in sub-paragraph (1)(b) was not met in respect of the transfer, references in sub-paragraphs (2) and (4) to decommissioning expenditure are references to such proportion of that expenditure as is just and reasonable. In this paragraph— If there is, for the purposes of Schedule 17 to FA 1980, a subsequent transfer of the whole or part of an interest in the oil field mentioned in sub-paragraph (1)(a), references in this paragraph to “the old participator” include references to each participator whose interest, or part of it, in the oil field is the subject of a transfer to which this paragraph applies.
Any power to make regulations under this Schedule is exercisable by statutory instrument. A statutory instrument containing regulations under this Schedule may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons. Any power to make regulations under this Schedule includes power—
Sections 3 and 4.
Expenditure incurred by any person in the acquisition of an asset is not allowable under section 3 or 4 of this Act for an oil field if expenditure previously incurred by another person in acquiring, bringing into existence, or enhancing the value of that asset is allowable under that section for that field. Section 4(13) of this Act applies to the preceding provisions of this sub-paragraph. Sub-paragraph (1) above shall, with any necessary modifications, have effect in relation to expenditure incurred by a person— as it has effect in relation to expenditure incurred in the acquisition of, or of an interest in, an asset.
Where, in a transaction to which this paragraph applies, a person has incurred expenditure in acquiring, bringing into existence or enhancing the value of an asset, he shall at any time be treated for the purposes of— as having incurred that expenditure only to the extent that it does not exceed the lowest of the amounts described in sub-paragraph (1ZA) below which is applicable in the particular case. Those amounts are— Subsections (1) to (3) of section 191 of the Finance Act 1993 apply to determine for the purposes of this paragraph what expenditure has at any time been incurred under a transaction to which this paragraph does not apply, as they apply in relation to expenditure for the allowance of which a claim is received by the Board after 16th March 1993. In sub-paragraph (1ZA)(a) above “loan expenditure” means expenditure in respect of interest or any other pecuniary obligation incurred in obtaining a loan or any other form of credit. The reference in sub-paragraph (1ZA)(b) above to the open market consideration for the acquisition, bringing into existence, or enhancement of the value, of an asset is a reference to the consideration which might reasonably have been given for the acquisition, bringing into existence, or enhancement of the value, of the asset (whatever the nature of the acquisition, bringing into existence or enhancement of the value) had it been made in a transaction to which this paragraph does not apply. This paragraph applies to any transaction between connected persons and to any transaction made otherwise than at arm’s length; and for the purposes of this paragraph a person is connected with another person if they are connected within the meaning of section 1122 of CTA 2010. The preceding provisions of this section shall, with any necessary modification, apply in relation to expenditure incurred by any person in acquiring an interest in an asset or in bringing into existence an asset in which he is to have an interest, or in enhancing the value of an asset in which he has an interest, as those provisions apply in relation to expenditure incurred by a person in acquiring, bringing into existence, or enhancing the value of an asset, as the case may be. The provisions of sub-paragraphs (1) to (2) above shall, with any necessary modification, apply in relation to expenditure incurred by any person in respect of— as they have effect in relation to expenditure incurred in the acquisition of, or of an interest in, an asset.
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Where an asset is used in connection with an oil field in circumstances such that section 4 of this Act applies to any expenditure incurred in acquiring, bringing into existence, or enhancing the value of that asset, then if— sub-paragraphs (2) to (4) below shall have effect. If the disposal occurs without the asset permanently ceasing to be used in connection with the field, its use in that connection shall for the purposes of section 4 of this Act and the following provisions of this paragraph be deemed to have permanently ceased at the time of the disposal. If the disposal takes place not later than the end of the claim period in which the use of the asset in connection with the field permanently ceases, the proportion of the expenditure allowable under section 4 of this Act for the relevant period (that is to say the period which, in relation to that claim period, is the relevant period for the purposes of subsection (7) of that section) or, if the claim period in question is the first relevant claim period (as defined in that section), the proportion of the expenditure so allowable for that claim period shall be computed under that section subject to the provisions of sub-paragraph (5) below. If the disposal takes place after the end of the claim period in which the use of the asset in connection with the field permanently ceases, then, as regards the claim period in which the disposal takes place— For the purposes of the computation mentioned in sub-paragraph (3) or (4) above, as the case may be— In any case where, for different parts of the expenditure incurred in the case of an asset as mentioned in sub-paragraph (1) above, different proportions thereof would be allowable under section 4 of this Act apart from sub-paragraph (5)(a) above (including a case where, for some but not all of that expenditure, the proportion thereof so allowable would be 100 per cent.), the amount or value of the consideration received or receivable for the disposition shall for the purposes of this paragraph be treated as referable to those different parts in such proportions as may be just and reasonable. Section 4(13) of this Act applies to the preceding provisions of this paragraph; and those provisions shall, with any necessary modifications, apply in relation to a disposal of an interest in an asset as they apply in relation to a disposal of an asset. Section 1122 of CTA 2010 (connected persons) shall apply for the purposes of this paragraph.
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Where in the case of an oil field, the total amount of the expenditure allowable under sections 3 and 4 of this Act on a claim for a claim period— that further amount shall be apportioned between the participators in proportions corresponding to what for that claim period would be their respective shares of any expenditure falling within section 2(9)(b)(i) of this Act; and in computing the assessable profit or allowable loss accruing to any participator in the earliest chargeable period which ends after the end of that claim period, the aggregate mentioned in section 2(4)(a) of this Act shall be increased by an amount equal to the amount apportioned to him under this paragraph. In this paragraph “the relevant provisions” means section 4(9) of this Act and paragraph 5(2) above.
Where, in consequence of the loss or destruction at any time within the period mentioned in sub-paragraph (1) of paragraph 4 above of such an asset as is mentioned in that sub-paragraph, any insurance or compensation in respect of the loss or destruction is receivable by a participator in the field or a person connected with a participator, paragraphs 4 and 6 above shall apply as if at that time the person by whom the insurance or compensation is receivable had disposed of the asset or his interest in it for an amount equal to the insurance or compensation. Section 1122 of CTA 2010 (connected persons) shall apply for the purposes of this paragraph.
Where an asset was acquired jointly by persons who are participators in two or more different oil fields (whether or not any one of those persons is a participator in more than one of those fields), then in determining for the purposes of section 4 of this Act, in the case of any one of those fields, the use which has been, or which it is reasonable to assume will be, made of the asset otherwise than in connection with that field, no regard shall be had to its use or possible use in connection with any other of those fields.
Sections 3 and 4.
In relation to any oil field— Provided that unless and until the responsible person elects the period of six months from the end of any particular claim period, the claim period next after that claim period shall be taken to be the period of twelve months from the end of it. An election under this paragraph must be made by notice in writing to the Board.
A claim under this Schedule for the allowance of any expenditure allowable under section 3 or 4 of this Act for an oil field must be made by the responsible person to the Board and, subject to the provisions of this Part of this Act, must be made in a claim or claims for the claim period in which the expenditure is incurred, but may not be made before the determination of the field or more than 4 years after the end of the claim period in which the expenditure is incurred. A claim under this Schedule for the allowance of any expenditure allowable under section 3 or 4 of this Act for an oil field which was incurred by a person before he became a participator in the field must be made in a claim for the claim period in which he became a participator. A claim under this Schedule shall not include any expenditure allowable under section 3 or 4 of this Act which has been included in a claim under Schedule 6 to this Act. A claim must state— Where a claim for the allowance of any expenditure under section 4 of this Act for an oil field was made in relation to any asset for the claim period which, in the case of that asset, is the first relevant claim period (as defined in that section), then any claim with respect to that field made under this Schedule for any subsequent claim period must give all such information as is relevant for the purpose of enabling the Board to carry into effect the provisions of that section in relation to that asset. A claim must be in such form as the Board may prescribe and must include a declaration that all statements contained in it are correct to the best of the knowledge and belief of the person making the claim. Where— sub-paragraph (1) above shall have effect as if the reference to 4 years after the end of the claim period in which the expenditure is incurred were a reference to two years after the relevant time. In sub-paragraph (7) above “the relevant time” means the earlier of—
This paragraph applies if— If a claim is made under this Schedule for the allowance of the abandonment expenditure, the amount of the default payment is to be attributed to the contributing participator for the purposes of paragraphs 2(4)(b) and 3(1)(c). But the amount attributed under sub-paragraph (2) may not exceed— Sub-paragraph (2) is subject to paragraph 2B. In determining the amount which is to be attributed to the contributing participator under sub-paragraph (2), account shall be taken of the whole of the defaulter's interest in the relevant oil field. But in determining the share of the abandonment expenditure to be attributed to the defaulter under paragraph 2(4)(b), the amount which would be attributed by reference to the defaulter's interest in the relevant oil field is to be reduced or (as the case may be) extinguished by the deduction of the aggregate of—
The Board shall by notice in writing to the responsible person inform him of their decision on the claim, stating in the notice— and where the decision relates to part only of the expenditure claimed, or claimed as so qualifying, the Board shall give a further notice or notices in relation to the remainder. In this paragraph “the relevant percentage” means the percentage mentioned in the said section 2(9)(b)(ii).
No amount is to be attributed to a contributing participator under paragraph 2A(2) unless the following conditions are all met. The first condition is that the contributing participator is not connected with the defaulter, applying section 1122 of CTA 2010 (connected persons) for the purposes of this sub-paragraph. The second condition is that, at the end of the claim period for which the claim is made, the defaulter still has an interest in the relevant oil field which, under paragraph 2(4)(b), falls to be taken into account in determining the shares in the abandonment expenditure. The third condition is that the relevant participators have taken all reasonable steps by way of legal remedy— In sub-paragraph (4) “relevant participators” means—
If, in a case where sub-paragraph (5) of paragraph 2 above requires a claim made for a particular claim period to give all such information as is relevant for the purpose there mentioned in relation to an asset, a claim satisfying the requirements of that sub-paragraph is not made within twelve months after the end of that period, then, in carrying into effect the provisions of section 4 of this Act in relation to that asset for that claim period, the Board may proceed according to the best of their judgment, and may make any adjustments under any of the provisions mentioned in paragraph 6(2) of Schedule 4 to this Act accordingly.
An amount attributed under paragraph 2A(2) is— In paragraphs 2A and 2B and this paragraph— For the purposes of paragraph 2A, a current participator is to be regarded as defaulting on a liability to make a payment towards abandonment expenditure if the following conditions are met. The first condition is that the current participator has failed to make the payment in full on the due day. The second condition is that— In sub-paragraphs (4) and (5) “due day” means the day on which the payment towards abandonment expenditure becomes due under the relevant agreement or the abandonment programme.
If— the responsible person may appeal by notice in writing given to the Board not more than three years after the making of the claim ...; but the bringing of an appeal under this paragraph shall not affect the operation of any notice so given by the Board. On an appeal that is notified to the tribunal against a decision on a claim brought on the ground mentioned in sub-paragraph (1)(b) above, and in any proceedings arising out of such an appeal, any participator in the oil field to which the claim relates shall be entitled to be a party. An appeal against a decision on a claim may at any time before it is notified to the tribunal be abandoned by a notice in writing given to the Board by the responsible person. On an appeal that is notified to the tribunal against a decision on a claim, the tribunal may vary the decision appealed against whether or not the variation is to the advantage of all or any of the participators in the oil field to which the claim relates. The provisions of paragraphs 14A to 14I of Schedule 2 shall apply to appeals under this paragraph subject to any necessary modifications.
Where the responsible person gives notice of appeal against a decision on a claim on one or both of the grounds mentioned in paragraph 5(1)(a) above and, before the appeal is determined by the tribunal, the Board and the responsible person agree on— the appropriate amount (if any) of the expenditure claimed or, as the case may be, claimed as so qualifying shall be treated for the purposes of this Part of this Act as having been allowed by the Board on the claim, and as having been so allowed on the date on which the notice of appeal was given. For the purposes of this sub-paragraph the appropriate amount (if any) of the expenditure claimed or, as the case may be, claimed as so qualifying, is an amount thereof equal to the excess, if any, of the amount so agreed on over the corresponding amount or the total of the corresponding amounts allowed by the notice or notices previously given by the Board under paragraph 3 above. Where the responsible person gives notice of appeal against a decision on a claim on the ground mentioned in paragraph 5(1)(b) above and, before the appeal is determined by the tribunal, the Board and the responsible person agree on the shares in which the amount of any expenditure allowed on the claim, or so allowed as qualifying for supplement under section 2(9)(b)(ii) of this Act, ought to be divided between the participators for the purposes of section 2(9)(b) of this Act, the shares so agreed on shall be deemed to be the shares stated in any notice previously given by the Board under paragraph 3 above on the claim, and shall apply in the case of any part of the expenditure claimed, or claimed as so qualifying, which is by virtue of this or the following paragraph treated as having been allowed on the claim; Where the Board and the responsible person agree on the matter mentioned in sub-paragraph (1)(a), sub-paragraph (1)(b) or sub-paragraph (2) above in the circumstances there mentioned, the corresponding ground of appeal shall be treated as having been abandoned; and where by virtue of this sub-paragraph all the grounds of the appeal fall to be so treated, the appeal itself shall be treated as having been abandoned.
Where, on an appeal under paragraph 5 above that is notified to the tribunal, the tribunal determines that any amount or part of an amount in dispute is allowable under section 3 or 4 of this Act or qualifies for supplement under section 2(9)(b)(ii) of this Act, the following provisions of this paragraph shall apply; Subject to paragraph 8(2) below, the said amount or part shall be treated for the purposes of this Part of this Act as having been allowed on the claim to which the appeal relates, and as having been so allowed on the date on which the notice of appeal was given. There shall be made in any computation made under section 2 of this Act, and in any assessment to tax or determination, all such adjustments as are necessary in consequence of the determination of the tribunal.
Where— the following provisions of this paragraph shall apply. Any expenditure allowable under section 3 or 4 of this Act, which, if the decision of the Board on the claim to which the appeal under paragraph 5 above related had been in accordance with the final determination of that matter, would have been allowed by that decision, or allowed by it as qualifying for supplement under section 2(9)(b)(ii) of this Act, shall be treated for the purposes of this Part of this Act as having been allowed by the Board on the claim to the extent that it has not been previously allowed on the claim, and as having been so allowed to that extent on the date on which the original notice of appeal was given under paragraph 5 above. There shall be made in any computation made under section 2 of this Act and in any assessment to tax or determination all such adjustments or further adjustments as are necessary in consequence of the final determination. Any tax which becomes payable in consequence of any adjustment made under sub-paragraph (3) above in an assessment for a chargeable period shall carry interest at the rate applicable under section 178 of the Finance Act 1989 from two months after the end of that period to the date of payment. For the purposes of this paragraph a matter shall not be deemed to be finally determined in any such proceedings as are mentioned in sub-paragraph (1)(b) above until a determination thereof made in any such proceedings can no longer be varied or overruled by the order of any court or the tribunal.
If ... it appears to the Board that the relevant amount was incorrectly stated in a notice of a decision under paragraph 3 above given to the responsible person for an oil field, the Board may before the expiry of the permitted period serve on the responsible Person a notice stating what appears to the Board to be the correct amount (referred to below as “the notice of variation”). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . In this paragraph “the relevant amount”, in relation to a notice of a decision on a claim under paragraph 3 above, means any one or more of the following— . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . In this paragraph “permitted period” means the period of 4 years beginning with the date on which the notice of the decision under paragraph 3 was given (but see sub-paragraph (2C)). Where the relevant amount was overstated in the notice of decision as a result of an inaccuracy in a statement or declaration made by the responsible person (or a person acting on behalf of the responsible person) in connection with the claim— The responsible person may, by notice in writing given to the Board not more than thirty days after the notice of variation was served on him, appeal ... against the notice of variation. A notice of appeal under sub-paragraph (3) shall state the grounds on which the appeal is brought. An appeal under this paragraph may at any time before it is notified to the tribunal be abandoned by notice in writing given to the Board by the responsible person. A notice of variation may be withdrawn at any time before it becomes effective. In any case where— the notice of variation shall have effect subject to such modifications as may be necessary to give effect to that agreement; and thereupon the appeal shall be treated as having been abandoned. On an appeal that is notified to the tribunal against a notice of variation the tribunal may vary the notice, quash the notice or dismiss the appeal; and the notice may be varied whether or not the variation is to the advantage of all or any of the participators in the oil field in question. Where a notice of variation relating to a decision on a claim becomes effective, the relevant amount shall be taken for the purposes of this Part of this Act as having been reduced or increased, as the case may require, on the date on which notice of the decision was given, by such amount as may be necessary to give effect to that notice, and the Board may make such computations under section 2 of this Act and such assessments or determinations or such amendments of assessments or determinations as may be necessary in consequence of that reduction or increase. A notice of variation becomes effective for the purposes of this paragraph either— . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . For the purposes of this section, an inaccuracy in a statement or declaration made by the responsible person (or a person acting on behalf of the responsible person) is careless if it is due to a failure by the person to take reasonable care. An inaccuracy in a statement or declaration made by the responsible person (or a person acting on behalf of the responsible person) is to be treated as careless if—
In this Schedule “tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.
Sections 3 and 4.
A claim for the allowance of any expenditure allowable under section 3 or 4 of this Act for an oil field may be made to the Board under this Schedule by the participator who incurred it (instead of under Schedule 5 to this Act by the responsible person for that field) if the participator satisfies the Board that, for reasons of trade secrecy, it would be unreasonable for him to have to provide the responsible person with the information necessary for the making of a claim under that Schedule. A claim by a participator under this Schedule for the allowance of any such expenditure incurred by him must, subject to the provisions of this Part of this Act, be made in a claim or claims for the claim period in which the expenditure is incurred, but may not be made before the determination of the field or more than 4 years after the end of the claim period in which the expenditure is incurred. A claim by a participator under this Schedule for the allowance of any such expenditure incurred by him before he became a participator in the field must be made in a claim for the claim period in which he became a participator.
The provisions of Schedule 5 to this Act specified in the first column of the following Table shall apply in relation to a claim under this Schedule as they apply in relation to a claim under that Schedule subject to any modifications specified in the second column of that Table and with the substitution, for references to the responsible person, of references to the participator by whom the claim under this Schedule is made and, for references to section 2(9)(b)(ii) of this Act, of references to section 2(9)(c)(ii) of this Act. Provisions applied Modifications Paragraph 2(3) For the reference to this Schedule substitute a reference to Schedule 5 to this Act. 2(4) Omit paragraph (b). 2(5) 2(6) 2(7) For the reference to paragraph 5 of Schedule 2 to this Act substitute a reference to paragraph 2 of that Schedule; for the reference to paragraph 2(1) of Schedule 5 to this Act substitute a reference to paragraph 1(2) of this Schedule. 2(8) 3(1) Omit paragraph (c). 4 5(1) Omit paragraph (b). 5(3) 5(4) For the reference to all or any of the participators substitute a reference to the participator by whom the claim is made. 5(5) — 6(1) 6(3) Omit the reference to paragraph 6(2). 7 8 9 . . .
Section 5.
Section 6.
Where it appears to the responsible person for an oil field that the winning of oil from the field has permanently ceased he may by notice in writing given to the Board refer to them for their decision the question whether the winning of oil from that field has permanently ceased.
The Board shall, by notice in writing given to the responsible person, inform him of their decision on the question and, if their decision is that the winning of oil has so ceased, shall state the date which they are satisfied is that on which the winning of oil from the field in question ceased. The responsible person shall, within one month of his receiving a notice under sub-paragraph (1) above informing him of the Board’s decision, furnish a copy of that notice to every person who was at any time a participator in the field in question.
The responsible person may appeal ... against the Board’s decision by notice in writing given to the Board within three months of his receiving the notice under paragraph 2(1) above informing him thereof. An appeal under sub-paragraph (1) above may at any time before it is notified to the tribunal be abandoned by notice in writing given to the Board by the responsible person. The provisions of paragraphs 14A to 14I of Schedule 2 shall apply to appeals under this paragraph subject to any necessary modifications.
A claim for the allowance, in connection with an oil field, of any unrelievable field loss allowable under section 6 of this Act in the case of a participator in that field must be made by the participator to the Board at any time afterthe date of the decision (whether of the Board or on appeal from the Board) that the winning of oil from the oilfield in the case of which the loss accrued has permanently ceased . . .. Where a claim under this Schedule has been made and the participator by whom it was made subsequently discovers that an error or mistake has been made in the claim, he may make a supplementary claim . . .. The provisions of Schedule 5 to this Act specified in the first column of the Table set out in paragraph 1(3) of Schedule 7 to this Act shall apply in relation to a claim under this Schedule as they apply in relation to a claim under the said Schedule 5, subject to any modifications specified in the second column of that Table and with the substitution, for references to the responsible person, of references to the participator by whom the claim under this Schedule is made, for references to the claiming or allowance of expenditure, of references to the claiming or allowance of an unrelievable field loss and, for references to section 3 or 4 of this Act, of references to section 6 of this Act.
For the purposes of this Schedule a company is a petroleum company if—
its activities include those specified in any of sub-paragraphs (a) to (e) of paragraph 2 below ; or
it is associated with a company whose activities include those specified in any of those sub-paragraphs and its own activities include those specified in sub-paragraph (f) of paragraph 2 below.
The activities referred to in paragraph 1 above are—
the acquisition or disposal of petroleum or of rights to acquire or dispose of petroleum ;
the importation into or exportation from the United Kingdom of petroleum products or the acquisition or disposal of rights to such importation or exportation ;
the acquisition otherwise than for importation into the United Kingdom of petroleum products outside the United Kingdom or the disposal outside the United Kingdom of petroleum products not exported from the United Kingdom by the company making the disposal;
the refining or processing of crude petroleum;
the extraction of petroleum, either under rights authorising it or under contractual or other arrangements with persons by whom such rights are exercisable ; and
the ownership, operation or management of ships or pipe lines (as denned in section 65 of the Pipe-lines Act 1962) used for transporting or conveying petroleum or petroleum products.
The application to a transaction of subsection (1) or (2) of section 485 of the Taxes Act shall not be excluded by the proviso thereto (resident buyer or resident seller) if— The conditions referred to in sub-paragraph (1) above are—
Where both the buyer and the seller are resident in the United Kingdom and the Board, in pursuance of the preceding paragraphs, direct that subsection (1) or subsection (2) of section 485 of the Taxes Act is to apply to the computation of the income, profits or losses of the one, the direction may extend the application of that subsection to the computation of the income, profits or losses of the other, and where it does so adjustments shall be made under subsection (3) of that section accordingly.
Where any property is sold and either the buyer or the seller is a petroleum company or both are petroleum companies, then if— section 485 of the Taxes Act shall apply in relation to the sale as if in both subsection (1) and subsection (2) of that section paragraph (a) were omitted.
the sale is part of a transaction or series of transactions (whether or not between the same persons) and its terms are affected by those of the remainder of the transaction or transactions ; or
what is sold is petroleum extracted under rights exercisable by a company other than the buyer, and not less than 20 per cent, of that company's ordinary share capital was at the time of the sale owned directly or indirectly by one or more of the following, that is to say the buyer and any companies associated with the buyer,
Where a petroleum company was a party to a sale of property, then, in determining for the purposes of section 485 of the Taxes Act what price the property might have been expected to fetch had the parties to the transaction been independent persons dealing at arm's length and what consequences would have ensued in computing the income, profits or losses of the seller or the buyer for tax purposes if the property had been sold for that price, it shall be assumed— and no regard shall be had to the terms of similar transactions which were capable of being varied. In this paragraph " material time " and " calendar month" have the meaning given by paragraph 3(2) of Schedule 3 to this Act.
In this Schedule— For the purposes of this Schedule—