Finance Act 1986

4 After paragraph 2 there shall be inserted the following paragraph—

“2A (1) The provisions of this paragraph apply if, having regard to the pattern of supply described in an election as mentioned in paragraph 1 (4)(b) above, it is reasonable to assume that, under a contract for the sale at arm's length of the light gases to which the election applies, the consideration would include—

(a) any such payments as are referred to in subsection (2) of section 114 of the [1984 c. 43.] Finance Act 1984 ("take or pay" payments), or

(b) any capacity payments, as defined in subsection (5) of that section.

(2) The relevant contract—

(a) shall be assumed to be for the delivery of gas according to the pattern of supply described in the election ; and

(b) shall be assumed to contain provision for such of the payments referred to in sub-paragraph (1) above as are appropriate to that pattern of supply.

(3) Sub-paragraph (1) of paragraph 2 above shall have effect as if for the words following "sale at arm's length" there were substituted "of the light gases to which the election applies, the total sums payable under the contract in respect of deliveries of gas in any chargeable period would not differ materially from the sums determined in accordance with the price formula specified in the election for gases disposed of or appropriated in that period; and if the Board are not so satisfied they shall reject the election

(4) The price formula specified in the election shall contain provisions for determining sums corresponding to such of the payments referred to in sub-paragraph (1) above as, by virtue of sub-paragraph (2) above, are assumed to be provided for by the relevant contract.”.