Part 2Trading income
F1Chapter 16AOil activities
Oil valuation
225GValuation where disposal not sale at arm's length
1
This section applies if conditions A, B and C are met.
2
Condition A is that a person disposes of oil acquired by the person—
a
in the course of oil extraction activities carried on by the person, or
b
as a result of oil rights held by the person.
3
Condition B is that the disposal is not a sale at arm's length (as defined in paragraph 1 of Schedule 3 to OTA 1975).
4
Condition C is that section 225F does not apply in relation to the disposal.
5
For income tax purposes, the disposal of the oil, and its acquisition by the person to whom it was disposed of, are to be treated as having been for a consideration equal to the market value of the oil.
6
Paragraphs 2 and 3A of Schedule 3 to OTA 1975 (definition of market value of oil including light gases) apply for the purposes of this section as they apply for the purposes of Part 1 of that Act, but with the following modifications.
7
Those modifications are that—
a
any reference in paragraph 2 to the notional delivery day for the actual oil is to be read as a reference to the day on which the oil is disposed of as mentioned in this section, and
b
paragraph 2(4) is to be treated as omitted.
Pt. 2 Ch. 16A inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 1 para. 2 (with Sch. 9 paras. 1-9, 22)