Section 61.
In this Schedule—"month" means calendar month;
"nominal volume" shall be construed in accordance with paragraph 7 below;
"nominated price" shall be construed in accordance with paragraph 6 below;
"nomination" means a nomination made in such manner as may be prescribed by regulations made by the Board;
"proposed sale", "proposed supply" and "proposed appropriation" shall be construed in accordance with paragraphs (a) to (c) of sub-paragraph (1) of paragraph 2 below;
"proposed delivery month" shall be construed in accordance with paragraph 3 below;
"proposed transaction" means one falling within paragraph 2(1) below;
"regulations made by the Board" means regulations under section 61(8) of this Act; and
"Treasury regulations" means regulations under section 61(7) of this Act.
For the purposes of this Schedule, a participator's equity production from an oil field in any month is his share of the oil won from the field which, in that month, is either delivered or relevantly appropriated, other than oil which is delivered to the Secretary of State pursuant to a notice served by him.
The proposed transactions which may be nominated by a participator in an oil field for the purposes of this Schedule are—
proposed sales at arm's length by the participator of specified quantities of oil for delivery from that oil field; and
proposed supplies by the participator (being a company) to another company which is associated with the participator of specified quantities of oil for delivery from that oil field for use for refining either by that other company or by a third company associated with the participator; and
proposed relevant appropriations by the participator of specified quantities of oil won from that field; and
any other proposed transactions specified for the purposes of this sub-paragraph by Treasury regulations;
and two companies are associated with each other for the purposes of paragraph (b) above if they would be so associated for the purposes of section 115(2) of the
Where a proposed sale is nominated before a contract of sale comes into being, any reference in this Schedule to the contract of sale is a reference to the subsequent contract for the sale of oil in accordance with the terms of the nomination; and, accordingly, if no such contract of sale comes into being, the nomination of the proposed sale shall be of no effect.
A participator may not nominate a proposed sale if—
under the terms of the contract of sale as originally entered into, the party undertaking to sell the oil is someone other than the participator; or
it is of a description prescribed for the purposes of this sub-paragraph by regulations made by the Board.
Subject to sub-paragraph (3) below, a nomination shall have effect with respect to proposed deliveries and appropriations of oil in one month only and, accordingly, where a nomination is of a proposed sale and the contract of sale provides for the supply of oil in more than one month, the nomination shall be effective only in relation to oil proposed to be delivered in the month for which the nomination has effect.
Subject to sub-paragraph (3) below, in relation to a nomination, "the proposed delivery month" means the month for which the nomination has effect in accordance with sub-paragraph (1) above.
In relation to a contract of sale of a description specified in the regulations, regulations made by the Board may permit a nomination to have effect as a nomination of a proposed sale for each of a number of months and, in relation to such a nomination, this Schedule shall have effect subject to such modifications as may be prescribed in the regulations.
Subject to sub-paragraph (2) below, a nomination shall be effective only if it is made not later than five o'clock in the afternoon of the second business day following the date which, in relation to a proposed transaction of that description, is prescribed as the transaction base date.
Sub-paragraph (1) above does not apply to a nomination made on or before 16th February 1987 which specified a proposed transaction having a transaction base date earlier than 12th February 1987.
The transaction base date prescribed for a proposed sale may be a date earlier than the date on which a legally binding agreement for the sale of the oil in question comes into being but may not be later than the date on which there is an agreed price at which any oil which is to be delivered pursuant to the contract of sale will be sold.
In this paragraph—
"business day" has the same meaning as in the
"prescribed" means prescribed by regulations made by the Board.
A nomination of a proposed transaction shall not be effective unless it specifies, with respect to that transaction,—
the name of the participator;
except in the case of a proposed appropriation, the name of the person to whom the oil is to be delivered;
the field from which the oil is to be delivered or relevantly appropriated;
the nominated price of the oil to be supplied or relevantly appropriated;
the nominal volume of that oil;
the proposed delivery month;
the transaction base date; and
such other information as may be prescribed by the Board.
A nomination shall include a declaration that it is correct and complete and, in the case of a nomination of a proposed sale which is made before the contract of sale comes into being, shall also include a declaration that, to the best of the knowledge and belief of the participator making the nomination, a contract of sale will come into being in accordance with the terms of the nomination.
Where a participator fraudulently or negligently furnishes any incorrect information or makes any incorrect declaration in or in connection with a nomination he shall be liable to a penalty not exceeding £50,000 or, in the case of fraud, £100,000.
Subject to sub-paragraph (3) below, in the case of a proposed sale, the "nominated price", in relation to the oil which is to be delivered pursuant to the sale, is the price specified in the contract of sale (expressed as a unit price) or, as the case may be, the formula under which, in accordance with the contract, the price for that oil (as so expressed) is to be determined.
Subject to sub-paragraph (3) below, in the case of a proposed supply or proposed appropriation, the "nominated price" of the oil concerned means the market value of that oil, ascertained in accordance with Schedule 3 to the principal Act and expressed as a unit price; and for the purposes of paragraph 5(d) above a statement that the nominated price of oil is its "market value" shall be sufficient.
Treasury regulations may—
vary the meaning of "nominated price" in relation to a proposed sale, supply or appropriation and, for that purpose, amend sub-paragraph (1) or sub-paragraph (2) above; and
make provision as to the meaning of "nominated price" in relation to a proposed transaction falling within paragraph 2(1 )(d) above.
Subject to sub-paragraph (3) below, in the case of a proposed sale, the nominal volume means the quantity of oil which it is proposed should be delivered under the contract of sale in the proposed delivery month.
Subject to sub-paragraph (3) below, in the case of a proposed supply or proposed appropriation, the nominal volume means the quantity of oil which the participator making the nomination proposes to supply or relevantly appropriate (as the case may be) in the proposed delivery month.
In the case of any proposed transaction, the nominal volume means the quantity of oil expressed in such manner as may be prescribed by regulations made by the Board.
In any case where—
apart from this sub-paragraph, the nominal volume in any proposed transaction would be expressed as a specific volume of oil, plus or minus a particular tolerance, and
that tolerance exceeds the limits prescribed for the purposes of this Schedule by regulations made by the Board,
the nominal volume shall for those purposes be taken to be the specific volume referred to in paragraph (a) above, plus or minus the maximum tolerance permitted by the regulations.
Where a nominal volume is expressed as a specific volume of oil, plus or minus a tolerance, any reference in paragraph 9 below to the maximum nominal volume or the minimum nominal volume is a reference to that specific volume of oil, plus or minus the tolerance respectively.
Except as provided by this paragraph, a nomination may not be amended or withdrawn.
If a participator who has made a nomination of a proposed sale does not, in whole or in part, fulfil his obligations under the contract of sale by the delivery of oil forming part of his equity production for the proposed delivery month, then, in accordance with regulations made by the Board, he may amend or withdraw the nomination if in his opinion—
there were good commercial reasons for the failure to fulfil those obligations; or
the failure was occasioned by circumstances over which neither he nor any person connected or associated with him had control.
An amendment or withdrawal of a nomination by a participator in accordance with sub-paragraph (2) above shall not be effective unless the Board give notice to the participator that the amendment or withdrawal is accepted, and the Board shall not give such a notice unless they are satisfied—
as to the matters mentioned in either paragraph (a) or paragraph (b) of sub-paragraph (2) above; and
if sub-paragraph (2)(a) above applies, that the failure was not part of a scheme or arrangement the main purpose of which was the avoidance of tax.
For the purposes of sub-paragraph (2)(b) above,—
section 533 of the Taxes Act (connected persons) applies; and
two companies of which one is a participator in an oil field are associated with each other if one has control over the other or both are under the control of the same person or persons;
and in paragraph (b) above "control" shall be construed in accordance with section 302 of the Taxes Act.
Where a nomination is amended in accordance with this paragraph, the preceding provisions of this Schedule shall apply in relation to it subject to such modifications as may be specified in regulations made by the Board.
The provisions of this paragraph have effect to determine, in relation to each nominated transaction, what is the effective volume of oil.
In relation to a proposed sale where the nominal volume is expressed as mentioned in paragraph 7(5) above and oil is in fact delivered under the contract of sale, the effective volume is whichever is the greater of—
the minimum nominal volume; and
so much of the total volume of oil actually delivered under the contract as does not exceed the maximum nominal volume.
In relation to any proposed sale which does not fall within sub-paragraph (2) above, the effective volume shall be taken to be the nominal volume.
In relation to a proposed supply or proposed appropriation, the effective volume is the nominal volume.
Subject to the provisions of this paragraph, for each month the aggregate effective volume of a participator's nominated transactions is the sum of the effective volumes of all of the proposed transactions nominated by him for that month.
If a participator's aggregate effective volume for any month, as determined under sub-paragraph (1) above, would exceed his equity production for that month—
his nominated transactions for that month shall be taken to be reduced by cancelling later nominations in priority to earlier ones until the cancellation of the next nominated transaction would produce an aggregate effective volume less than the participator's equity production; and
the effective volume of the latest remaining nominated transaction shall be taken to be reduced so far as necessary to secure that the aggregate effective volume is equal to the participator's equity production.
For each month, a participator's aggregate nominated proceeds for the purposes of section 61 of this Act is the sum of—
the proceeds of each nominated transaction falling within sub-paragraph (2) below; and
the market value of any excess falling within sub-paragraph (3) below.
For each nominated transaction, the effective volume of which forms part of the participator's aggregate effective volume for the month, as defined in paragraph 10 above, the proceeds of the transaction means the effective volume multiplied by the nominated price.
If the participator's equity production for a month exceeds his aggregate effective volume for that month, as defined in paragraph 10 above, the market value of the excess shall be determined in accordance with Schedule 3 to the principal Act.
The reference in sub-paragraph (2) above to the nominated price is a reference to that price expressed in sterling; and regulations made by the Board shall make provision with respect to the conversion into sterling of any nominated price which is expressed in a currency other than sterling.
In accordance with regulations made by the Board, a person who is a participator in two or more fields may nominate a proposed sale, supply or appropriation of oil which is blended oil, within the meaning of section 63 of this Act; and the preceding provisions of this Schedule shall have effect in relation to such a nomination subject to such modifications as may be prescribed by regulations made by the Board.
In paragraph 2 of Schedule 2 to the principal Act (returns by participators) at the end of sub-paragraph (3) there shall be inserted the following sub-paragraph—
A return under this paragraph for a chargeable period shall— state the amount (if any) which, in the case of the participator, is to be brought into account for that period in accordance with section 2(5)(e) of this Act; contain such particulars as the Board may prescribe (whether before or after the passing of the Finance Act 1987) with respect to any nominated transaction under Schedule 10 to that Act— the effective volume of which forms part of the participator's aggregate effective volume (construing those terms in accordance with that Schedule) for any calendar month comprised in that chargeable period; and which has not led to deliveries of oil or relevant appropriations of which particulars are included in the return by virtue of sub-paragraph (2) above; and contain such other particulars as the Board may prescribe (as mentioned above) in connection with the application of section 61 of and Schedule 10 to the Finance Act 1987.