Income Tax (Trading and Other Income) Act 2005

[F1Oil valuationU.K.

225FValuation where market value taken into account under section 2 of OTA 1975U.K.

(1)This section applies if a person disposes of oil in circumstances such that the market value of the oil—

(a)falls to be taken into account under section 2 of OTA 1975, otherwise than by virtue of paragraph 6 of Schedule 3 to that Act, in calculating for petroleum revenue tax purposes the assessable profit or allowable loss accruing to that person in a chargeable period from an oil field, or

(b)would so fall but for section 10 of that Act.

(2)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—

(a)as so taken into account under section 2 of that Act, or

(b)as would have been so taken into account under that section but for section 10 of that Act.

225GValuation where disposal not sale at arm's lengthU.K.

(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.

225HValuation where excess of nominated proceedsU.K.

(1)This section applies if an excess of nominated proceeds for a chargeable period—

(a)is taken into account in calculating a person's profits under section 2(5)(e) of OTA 1975, or

(b)would have been so taken into account if the person were chargeable to tax under OTA 1975 in respect of an oil field.

(2)For income tax purposes, the amount of the excess is to be added to the consideration which the person is treated as having received in respect of oil disposed of by that person in the period.

225IValuation where relevant appropriation but no disposalU.K.

(1)This section applies if conditions A and B are met.

(2)Condition A is that a person makes a relevant appropriation of oil without disposing of it.

(3)Condition B is that the person does so in circumstances such that the market value of the oil—

(a)falls to be taken into account under section 2 of OTA 1975 in calculating for petroleum revenue tax purposes the assessable profit or allowable loss accruing to that person in a chargeable period from an oil field, or

(b)would so fall but for section 10 of that Act.

(4)For income tax purposes, the person is to be treated as having, at the time of the appropriation—

(a)sold the oil in the course of the separate trade consisting of activities falling within the definition of “oil-related activities” in section 16(2) (oil extraction and related activities), and

(b)purchased it in the course of the separate trade consisting of activities not so falling.

(5)For income tax purposes, that sale and purchase is to be treated as having been at a price equal to the market value of the oil—

(a)as so taken into account under section 2 of OTA 1975, or

(b)as would have been so taken into account under that section but for section 10 of that Act.

(6)In this section “relevant appropriation” has the meaning given by section 12(1) of OTA 1975.

225JValuation where appropriation to refining etcU.K.

(1)This section applies if conditions A, B and C are met.

(2)Condition A is that a person appropriates 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 oil is appropriated to refining or to any use except the production purposes of an oil field (as defined in section 12(1) of OTA 1975).

(4)Condition C is that section 225I does not apply in relation to the appropriation.

(5)For income tax purposes—

(a)the person is to be treated as having, at the time of the appropriation, sold and purchased the oil as mentioned in section 225I(4)(a) and (b), and

(b)that sale and purchase is to be treated as having been at a price 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 appropriated as mentioned in this section,

(b)any reference in paragraphs 2 and 2A to oil being relevantly appropriated is to be read as a reference to its being appropriated as mentioned in this section, and

(c)paragraph 2(4) is to be treated as omitted.]