Income and Corporation Taxes Act 1988

502 Interpretation of Chapter V. U.K.

(1) In this Chapter—

• “the 1975 Act” means the Oil Taxation Act 1975 M1 ;

• “oil” means any substance won or capable of being won under the authority of a licence granted under either [F1 Part I of the Petroleum Act 1998] or the M2 Petroleum (Production) Act (Northern Ireland) 1964, other than methane gas won in the course of operations for making and keeping mines safe;

• “oil extraction activities” means any activities of a person—

  (a)

  in searching for oil in the United Kingdom or a designated area or causing such searching to be carried out for him; or

  (b)

  in extracting or causing to be extracted for him oil at any place in the United Kingdom or a designated area under rights authorising the extraction and held by him or, if the person in question is a company, by the company or a company associated with it; or

  (c)

  in transporting or causing to be transported for him F2 . . . oil extracted at any such place not on dry land under rights authorising the extraction and so held [F3 where the transportation is—

  (i)

  to the place where the oil is first landed in the United Kingdom, or

  (ii)

  to the place in the United Kingdom or, in the case of oil first landed in another country, 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 such place, the one nearest to the place of extraction]; or

  (d)

  in effecting or causing to be effected for him the initial treatment or initial storage of oil won from any oil field under rights authorising its extraction and so held;

• “oil field” has the same meaning as in Part I of the 1975 Act;

• “oil rights” means rights to oil to be extracted at any place in the United Kingdom or a designated area, or to interests in or to the benefit of such oil;

• “participator” has the same meaning as in Part I of the 1975 Act; and

• “ring fence income” means income arising from oil extraction activities or oil rights; and

• “ring fence profits” has the [F4 meaning given by subsection (1A) below] or, in any case where that subsection does not apply, means ring fence income; [F5 and

• “ring fence trade” means activities which—

  (a)

  fall within [F6 the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or within section 492(1) above]; and

  (b)

  constitute a separate trade (whether by virtue of [F7 section 16(1) of ITTOIA 2005 or section 492(1) above] or otherwise)].

[F8 (1A) Where in accordance with section 197(3) of the 1992 Act a person has an aggregate gain for any chargeable period, that gain and his ring fence income (if any) for that period together constitute his ring fence profits for the purposes of this Chapter.]

(2) For the purposes of subsection (1) above—

(a) “designated area” means an area designated by Order in Council under section 1(7) of the M3 Continental Shelf Act 1964;

(b) “initial treatment” has the same meaning as in Part I of the 1975 Act; and

(c) the definition of “initial storage” in section 12(1) of the 1975 Act shall apply but, in its application for those purposes in relation to the person mentioned in subsection (1)(d) 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.

(3) For the purposes of this Chapter two companies are associated with one another if—

(a) one is a 51 per cent. subsidiary of the other;

(b) each is a 51 per cent. subsidiary of a third company; or

(c) one is owned by a consortium of which the other is a member.

[F9 (3A) Section 413(6) applies for the purposes of subsection (3)(c) above F10 . . . .]

(4) Without prejudice to subsection (3) above, for the purposes of this Chapter, two companies are also associated with one another if one has control of the other or both are under the control of the same person or persons; and in this subsection “control” shall be construed in accordance with section 416.

Textual Amendments

F1 S. 502(1): words in definition of "oil" substituted (15.2.1999) by Petroleum Act 1998 (c. 17), Sch. 4 para. 25, s. 52(4); S.I. 1999/161, art. 2(1)

F2 S. 502(1): words in definition of "oil extraction activities" repealed (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 55(1)(a)(2), 82, Sch. 18 Pt.VII

F3 S. 502(1): words in definition of "oil extraction activities" inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 55(1)(b)(2)

F4 S. 502(1): words in definition of "ring fence profits" substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290(1), Sch. 10 para. 14(30) (with ss. 60, 101(1), 171(1), 201(3))

F5 S. 502(1): definition of "ring fence trade" added by Finance Act 1990 (c. 29), s. 62(3)

F6 S. 502(1): words in definition of "ring fence trade" substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 194(a) (with Sch. 2)

F7 S. 502(1): words in definition of "ring fence trade" substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 194(b) (with Sch. 2)

F8 S. 502(1A) inserted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 300(1), Sch. 10 para. 14(30) (with ss. 60, 101(1), 171, 201(3))

F9 S. 502(3A) substituted for words in s. 502(3) (with effect in accordance with Sch. 27 para. 12(2) of the amending Act) by Finance Act 2000 (c. 17), Sch. 27 para. 9

F10 Words in s. 502(3A) repealed (22.4.2009) by Finance Act 2009 (c. 10), Sch. 45 para. 4

Marginal Citations

M1 1975 c. 22.

M2 1964 c. 28 (N.I.)

M3 1964 c. 29.