The Petroleum Revenue Tax (Nomination Scheme for Disposals and Appropriations) (Amendment) Regulations 1990

Excluded oil2A

1

Oil which forms part of a participator’s equity production from an oil field for a chargeable period shall be excluded from section 61 of the Finance Act 1987 if, in respect of that chargeable period–

a

the conditions specified in paragraph (2) below are satisfied; and

b

where any of the oil referred to in paragraph (2) below is blended oil, the further conditions specified in paragraph (3) below are satisfied.

2

The conditions specified in this paragraph are that–

a

the participator sells at arm’s length all of the oil which comprises that equity production and all oil of the same kind which forms part of his equity production from other oil fields for that chargeable period; and

b

all persons connected with the participator sell at arm’s length all of the oil which comprises their equity production from that oil field for that chargeable period and all oil of the same kind which forms part of their equity production from other oil fields for that chargeable period; and

c

neither the participator nor any person connected with him enters into a contract for the sale of oil from any of the oil fields referred to in sub-paragraphs (a) and (b) above for delivery in that chargeable period other than a contract under which oil forming part of the equity production of the participator or (as the case may be) the person connected with him from any of those fields is delivered in the chargeable period to the purchaser or his nominee; and

d

the participator states in the return for that chargeable period required by paragraph 2 of Schedule 2 to the Oil Taxation Act 19754 that the conditions specified in sub-paragraphs (a) to (c) above are satisfied.

3

The further conditions specified in this paragraph are that–

a

blended oil delivered by any person under a contract of sale within paragraph (2)(a) or (b) above in any calendar month is apportioned to him in respect of his interest in each originating field by reference to the formula–

$\genfrac{}{}{0.1ex}{}{\mathrm{A}\times \mathrm{B}}{\mathrm{C}}$

where–

• A is the amount of blended oil allocated to him for that month in respect of his interest in that field;

• B is the amount of blended oil delivered under that contract; and

• C is the total amount of blended oil that is allocated to him for that month in respect of his interests in all the originating fields; and

b

the participator states in the return referred to in paragraph (2)(d) above that the condition specified in sub-paragraph (a) above is satisfied.

4

In paragraph (3)(a) above “allocated” means allocated in accordance with the method of allocation that is in force in respect of the time when the delivery is made, and “method of allocation” means an agreed method falling within section 63(2) of the Finance Act 1987.

5

For the purposes of this regulation, a participator’s equity production from an oil field for a chargeable period is his share of the oil won from the field which, in that period, is either delivered or relevantly appropriated and no account shall be taken for those purposes of any oil to which section 61 of the Finance Act 1987 does not apply by virtue of subsection (2)(a) or (b) of that section.

6

Any question whether a person is connected with another for the purposes of this regulation shall be determined as though the provisions of section 839 of the Income and Corporation Taxes Act 19885 applied to this regulation.