The Oil and Gas Authority (Levy and Fees) Regulations 2023

Liability to pay non-production levy

4.—(1) Subject to paragraphs (2) to (4), a licensee is liable to pay the non-production levy in respect of each of the following kinds of licence held by the licensee at the relevant time—

(a) an offshore exploration licence;

(b) an offshore production licence in respect of which the criterion at regulation 3(2) is not satisfied.

(2) A licensee which at the relevant time—

(a) is a micro-enterprise, and

(b) holds an innovate licence in phase B of its initial term,

is liable to pay the non-production levy discounted by 80% in respect of that licence.

(3) A licensee which at the relevant time—

(a) is a micro-enterprise, and

(b) holds either—

(i) a promote licence in its promote period, or

(ii) an innovate licence in phase A of its initial term,

is liable to pay the non-production levy discounted by 90% in respect of that licence.

(4) A licensee does not qualify to pay the non-production levy at a discounted rate under paragraph (2) or (3) if the licensee, when viewed together with all group undertakings of the licensee, does not fall within the size and financial limits set out in the definition of “micro-enterprise”.

(5) Where the licensee is more than one person—

(a) the liability under this regulation is joint and several, and

(b) the licensee is only a micro-enterprise for the purposes of paragraphs (2) and (3) if every person who is a licensee is a micro-enterprise.

(6) In this regulation—

“financial year” is determined in accordance with section 390 of the Companies Act 2006(1);

“group undertaking”, in relation to an undertaking, means—

(a)

a parent undertaking or subsidiary undertaking of that undertaking, or

(b)

a subsidiary undertaking of any parent undertaking of that undertaking;

“innovate licence” means an offshore production licence in which, in accordance with the model clauses, the initial term of the licence (within the meaning of the licence) is divided into phases;

“micro-enterprise” means an undertaking which has fewer than 10 employees and meets one or both of the following requirements—

(a)

its turnover does not exceed £1,778,000;

(b)

the aggregate of the amounts shown as assets in its balance sheet does not exceed £1,778,000,

in the undertaking’s financial year immediately preceding that in which the licensee is liable to pay the non-production levy;

“model clauses” means model clauses prescribed by the Petroleum Licensing (Production) (Seaward Areas) Regulations 2008(2);

“promote licence” means an offshore production licence in which, in accordance with the terms of the licence—

(a)

a “promote period” is specified, and

(b)

a clause is included concerning the effect of the expiry of the promote period in relation to the continuation of that licence beyond that period;

“turnover” has the meaning given in section 474 of the Companies Act 2006;

“undertaking” means—

(a)

a body corporate or partnership, or

(b)

an unincorporated association carrying on a trade or business, with or without a view to profit.

(1)

2006 c.46.

(2)

S.I. 2008/225, as amended by S.I. 2009/229, S.I. 2009/3283, S.I. 2016/912, S.I. 2016/992, S.I. 2017/426 and S.I. 2017/855.