Finance Act 2009

Part 3 Field allowance: when held and unactivated amount

Initial licensee to hold a field allowance

5 (1) A company that is an initial licensee in a new oil field is to hold a field allowance for that field as from the beginning of the authorisation day.

(2) The amount of the field allowance which the licensee is to hold at that time is—

T × S

where—

• T is the amount of the total field allowance for the field (see paragraph 24), and

• S is the share of the equity in the field which the initial licensee has at the beginning of the authorisation day.

Holding a field allowance on acquisition of equity share

6 For provision about holding a field allowance by virtue of the acquisition of a share of the equity in a new oil field, see paragraph 15(2).

Unactivated amount of a field allowance

7 (1) This paragraph applies if a company holds a field allowance for a new oil field by virtue of paragraph 5 or 15(2).

(2) The unactivated amount of that allowance at a particular time (“the relevant time”) is—

where—

• R is the amount of the field allowance which the company held before the relevant time by virtue of paragraph 5 or 15(2),

• E is the total amount of the field allowance received before the relevant time by virtue of paragraph 15(1) (company already holding field allowance acquires equity share),

• A is the total amount of the field allowance activated in respect of—

  (a)

  accounting periods ending before the relevant time, or

  (b)

  reference periods ending before the relevant time, and

• D is the total amount of reductions in the field allowance made before the relevant time by virtue of paragraph 14 (company disposes of equity share).

(3) A company ceases to hold a field allowance for a new oil field if the unactivated amount of that allowance falls to nil.