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.

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.

the aggregate of the amounts mentioned in subsection (5) below; and

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 F9(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 F9(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

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 price received or receivable for the F15oil shall be deemed to be that for which it would have been sold, and

the F15oil shall be deemed to be delivered at the time it would have been delivered,

in the case of F15oil extracted in the United Kingdom, at the place of extraction; or

in the case of F15oil 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 F18or, 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 sum of the amounts mentioned in subsection (7) below; and

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 Secretary of State under any relevant licence otherwise than by way of royalty.

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;

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 F25; 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 determinationF27; 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.

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.

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 Secretary of State 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;

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

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.

expenditure is incurred by a participator for any of the purposes mentioned in paragraph (i) or paragraph (j) of subsection (1) above, and

the participator is or was a participator in two or more oil fields and the qualifying asset which is relevant to the incurring of that expenditure is, at the end of the claim period concerned, a qualifying asset in respect of more than one of those oil fields,

any expenditure incurred by a participator would, apart from this subsection, be regarded as wholly incurred for any of the purposes mentioned in paragraph (i) or paragraph (j) of subsection (1) above, and

the qualifying asset which is relevant to the incurring of that expenditure has at some time been used otherwise than in connection with F82 a taxable 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 Secretary of State any payment falling within subsection (1)(b) above; 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; . . . F90

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 Secretary of State; F91or

any payment made in pursuance of a notice under paragraph 4 of Schedule 15 to the Finance Act 1973 (provisions supplementing the territorial extension of charge to tax under section 38 of that Act);

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 F94or 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 F94or another countryfrom 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 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,

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;

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).

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,

“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.

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

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,

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.

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.

“company” means any body corporate;

section F35839 of the Taxes Act (connected persons) shall apply; and

section F35838 of the Taxes Act (subsidiaries) shall apply.

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.

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.

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.

the purpose of searching for oil in F40the territorial sea of the United Kingdom or a designated area;

the purpose of ascertaining the extent or characteristics of any oil-bearing area in F40the 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 Secretary of State any payment under or for the purpose of obtaining a licence (not being a payment by way of royalty or other periodic payment).

the licence to which the expenditure related has expired or has been determined or revoked; or

part of the licensed area has been surrendered;

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

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.

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 paragraph 2, in paragraph F45(f) of sub-paragraph (2) for the words from the beginning to “paragraph in question” there shall be substituted “ the contract is for the sale of the whole quantity of oil whose market value falls to be ascertained for the purposes of section 5A(5B) of this Act ”;

sub-paragraphs (3) and (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.

consent for development is granted to a licensee by the Secretary of State 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 Secretary of State for the whole or part of 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,

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.

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.

“the abandoned field” means the oil field from which the winning of oil has permanently ceased; and

“the person to whom the loss accrued” means the person to whom, as a participator in the abandoned field, the loss accrued (whether or not he is the participator in another oil field who makes the claim for the allowance of the unrelievable field loss).

“company” means any body corporate; and

section F101838 of the Taxes Act (subsidiaries) shall apply.

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).

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,

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 M8Finance Act 1987 which is accepted by the Board as allowable in accordance with Schedule 14 to that Act;

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,

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.

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

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.

if in his case a reduction is made for that period under subsection (1)(a) above, an amount in F48metric 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 F48metric tonnes arrived at by multiplying his share of the oil allowance for the field for that period (in F48metric 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.

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 F485 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.

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 F51which 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)

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.

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 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 M2Finance Act 1980 apply to the transfer,

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.

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;

in the case of expenditure which would otherwise have been allowable by virtue of the said paragraph (a), (b) or (c), is the proportion which, according to estimates submitted to the Secretary of State after the end of June 1975 and approved by him as reasonable, the field’s original reserves of oil exclusive of oil so falling bear to the field’s original reserves of oil inclusive of such oil;

in the case of expenditure which would otherwise have been allowable by virtue of the said F105paragraph (hh), (i) or (j), is the proportion which, at the end of the claim period in which the expenditure was incurred, the total amount of oil ever won and saved from the field, exclusive of excluded oil, bears to the total amount of oil ever won and saved from the field;

the storing of oil as part of or in conjunction with the operation of an oil refinery; or

deballasting; or

conveying oil in a pipe-line;

subjecting oil won from the field to any process of which the sole purpose is to enable the oil to be safely stored, safely loaded into a tanker or safely accepted by an oil refinery; or

separating oil so won and consisting of gas from other oil so won; or

separating oil so won and consisting of gas of a kind that is transported and sold in normal commercial practice from other oil so won and consisting of gas; or

liquifying oil so won and consisting of gas of such a kind as aforesaid for the purpose of transporting it; or

subjecting oil so won to any process of which the purpose is to secure that oil disposed of crude has the quality that is normal for oil so disposed of from the field,

the person entitled to the benefit of a licence or, where two or more persons are entitled to the benefit of a licence, each of those persons; and

a person who has rights under an agreement which is approved by the Board and is certified by the Secretary of State to confer on that person rights which are the same as, or similar to, those conferred by a licence;

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

a person who is no longer a licensee in respect of any licensed area wholly or partly included in the field, but who was such a licensee at any time in either of the two chargeable periods preceding that chargeable period; and

carrying on drilling or production operations within the field; or

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 F66or to the place in the United Kingdom F67or another countryat 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 initial treatment of oil won from the field;