Oil Taxation Act 1983
| Year | 1983 |
Oil Taxation Act 1983
1983 CHAPTER 56
An Act to vary the reliefs available for certain expenditure incurred in connection with assets used or to be used in connection with oil fields; to bring into charge to petroleum revenue tax certain sums received or receivable in respect of such assets and of certain other assets situated in the United Kingdom, the territorial sea thereof or a designated area, within the meaning of the Continental Shelf Act 1964; to amend Part II of the Oil Taxation Act 1975 in relation to sums so received or receivable; and for connected purposes.
[1st December 1983]
Most Gracious Sovereign,
We , Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to make the provision hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Reliefs for expenditure
1 Expenditure incurred on non-dedicated mobile assets.
(1) Subject to subsection (3) below, with respect to expenditure which is or was incurred after 30th June 1982 in acquiring, bringing into existence or enhancing the value of an asset, section 4 of the principal Act (allowance of expenditure on long-term assets) shall apply only where—
(a ) the asset is a mobile asset which is not dedicated to the oil field referred to in subsection (1) of that section; or
(b ) the expenditure is incurred as mentioned in section 13(1)(b ) below.
(2) Where section 4 of the principal Act applies as mentioned in subsection (1)(a ) above, it shall so apply with the following modifications:—
(a ) in subsection (1), after the words ‘subsection (13) below’ there shall be inserted the words ‘and section 1 of the Oil Taxation Act 1983’ and for the words from ‘whose useful life’ to ‘used’ there shall be substituted the words ‘which, at the end of the first relevant claim period, is or is expected to be a long-term asset as defined in section 3(8) of the Oil Taxation Act 1983’;
(b ) subsections (3) and (4) shall be omitted;
(c ) in subsection (5), paragraph (a ) and the words ‘in any other case’ in paragraph (b ) shall be omitted and, in paragraph (b ), for the words ‘that connection’ there shall be substituted the words ‘connection with the field’;
(d ) subsection (6) shall be omitted;
(e ) in subsection (7), for the words from the beginning to ‘each subsequent claim period’ there shall be substituted the words ‘For each claim period subsequent to the first relevant claim period and’ and for the words ‘subsections (5) and (6)’ there shall be substituted the words ‘subsection (5)’; and
(f ) in subsection (11) for the words from ‘subsections (5)’ to ‘they apply’ there shall be substituted the words ‘subsection (5) above (including that subsection as it applies’.
(3) If the asset referred to in subsection (1)(a ) above becomes dedicated to the oil field referred to in subsection (1) of section 4 of the principal Act or is or becomes dedicated to another oil field,—
(a ) expenditure incurred as mentioned in subsection (1) above shall not be allowable under section 4 of the principal Act for a claim period for which it is allowable under section 3 below nor, subject to paragraph (b ) below, for a claim period which falls wholly or partly within a claim period of another field to which the asset is or becomes dedicated, being a claim period for which the expenditure is allowable; and
(b) where expenditure incurred in relation to the asset becomes allowable under section 3 below, no part of that expenditure shall be allowable under section 4 of the principal Act for any claim period ending less than six months before the end of a claim period for which the expenditure is allowable under section 3 below.
(4) Paragraph 4 of Schedule 4 to the principal Act (reduction of allowable expenditure on disposal of long-term asset formerly used in connection with an oil field) does not apply to any disposal of an asset after 30th June 1982 unless the asset is a mobile asset which is not dedicated to the oil field referred to in section 4(1) of the principal Act.
2 Dedicated mobile assets.
(1) For the purposes of this Act and Part I of the principal Act a mobile asset becomes dedicated to a particular oil field in a claim period if—
(a ) the asset is used in connection with that field during the whole or part of that claim period; and
(b ) the asset was not, at the beginning of that period, already dedicated to that field; and
(c ) at the end of that period it is reasonable to make the assumptions in subsection (2) below.
(2) The assumptions referred to in paragraph (c ) of subsection (1) above are—
(a ) that during the whole or substantially the whole of the relevant period, the asset will be used in connection with the field referred to in that subsection (whether or not that use will be exclusive to that field); and
(b ) that the main use of the asset during the whole of the relevant period will be in connection with that field or with two or more oil fields of which that field is one.
(3) In any case where—
(a ) at or before the time when he is a participator in an oil field, a person incurs expenditure in bringing into existence a mobile asset, and
(b ) that expenditure is so incurred in a claim period for that field which is earlier than that in which the asset is first used by that person in connection with that field, and
(c ) at the end of that claim period, it is reasonable to make the assumptions in subsection (2) above, and
(d ) the circumstances are such that the asset is not a brought-in asset, as defined in section 4(12)(a ) of the principal Act,
then, as respects any claim for the allowance of the expenditure referred to in paragraph (a ) above which is made before the asset is first used as mentioned in paragraph (b ) above, the asset shall be regarded for the purposes of this Act and Part I of the principal Act as becoming dedicated to the oil field in question in the claim period referred to in paragraphs (b ) and (c ) above.
(4) In subsection (2) above ‘the relevant period’ means the period beginning at the end of the claim period referred to in subsection (1) above or, where subsection (3) above applies, at the end of the claim period in which it can reasonably be expected that the asset will be first used, and ending—
(a ) at the end of the useful life of the asset, or
(b ) when the winning of oil from the field in question permanently ceases,
whichever first occurs.
(5) If, in the case of a mobile asset which would not be dedicated to a particular oil field but for the provisions of subsection (3) above, it becomes apparent at any time that it is no longer reasonable to make the assumptions in subsection (2) above, then the asset concerned shall be regarded for the purposes of this Act and Part I of the principal Act as never having been dedicated to that field; and the provisions of paragraph 9 of Schedule 5 to the principal Act (variations of decisions on claims for allowable expenditure) shall have effect accordingly.
3 Expenditure incurred on long-term assets otherthan non-dedicated mobile assets.
(1) Subject to section 13 below, this section applies to expenditure (whether or not of a capital nature) which is or was incurred by a person after 30th June 1982 and at or before the time when he is or was a participator in an oil field, being expenditure incurred, subject to subsection (2) below, in acquiring, bringing into existence, or enhancing the value of an asset—
(a ) which, at the end of the relevant claim period, is being or is expected to be used in connection with the field; and
(b ) which, at the end of the relevant claim period, is or is expected to be a long-term asset; and
(c ) which either is not a mobile asset or is a mobile asset which became dedicated to that field in the relevant claim period or in any earlier claim period.
(2) This section does not apply to expenditure incurred as mentioned in subsection (1) above in any case where the Board consider that its application to that expenditure would have only a negligible effect on the total expenditure allowable under Part I of the principal Act for the field and so notify the responsible person.
(3) Part I of Schedule 1 to this Act shall have effect for the purpose of allowing relief for certain expenditure which would not otherwise fall within this section or, as the case may be, section 3 of the principal Act.
(4) Except as provided by subsections (6) and (7) and section 4 below and Part II of Schedule 1 to this Act, the whole of any expenditure to which this section applies shall be allowable on a claim under Schedule 5 or Schedule 6 to the principal Act for the relevant claim period.
(5) The relevant claim period referred to in subsections (1) and (4) above is—
(a ) the claim period which is appropriate under paragraph 2 of Schedule 5 or, as the case may be, paragraph 1 of Schedule 6 to the principal Act; or
(b ) if the asset is a brought-in asset, as defined in section 4(12)(a ) of the principal Act, and the expenditure has not already been allowable for an earlier claim period by virtue of paragraph (a ) above, the claim period in which the asset is first used in connection with the field in question, discounting, in the case of a mobile asset,...
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