Oil Taxation Act 1975
Oil Taxation Act 1975
1975 CHAPTER 22
An Act to impose a new tax in respect of profits from substances won or capable of being won under the authority of licences granted under the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964; to make in the law relating to income tax and corporation tax amendments connected with such substances or with petroleum companies; and for connected purposes.
[8th May 1975]
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 give and grant unto Your Majesty the new tax hereinafter mentioned and to make such other provision as is hereinafter contained; 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:—
Part I
Petroleum Revenue Tax
1 Petroleum revenue tax.
(1) A tax, to be known as petroleum revenue tax, shall be charged in accordance with this Part of this Act in respect of profits from oil won under the authority of a licence granted under either the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964 ; and in this Part of this Act ‘oil’ means any substance so won or capable of being so won other than methane gas won in the course of operations for making and keeping mines safe.
(2) For each oil field the tax shall, in the case of each participator, be charged at the rate of 45 per cent. on the assessable profit accruing to him in any chargeable period from that field, as reduced under section 7 of this Act by any allowable losses and under section 8 of this Act by reference to his share, if any, of the oil allowance for that period, subject however to the limit imposed in his case by section 9 of this Act.
(3) In relation to any oil field—
(a ) the first chargeable period is the period ending at the end of the critical half year (including an unlimited time prior to the beginning of that half year); and
(b ) each subsequent half year is a chargeable period.
(4) In this section—
‘the critical half year’, in relation to an oil field, means the first half year ending after 12th November 1974 at the end of which the total amount of oil ever won and saved from the field exceeds 1,000 long tons (counting 40,000 cubic feet of gas at a temperature of 15 degrees centigrade and pressure of one atmosphere as equivalent to one long ton);
‘half year’ means a period of six months ending at the end of June or December.
(5) Schedule 1 to this Act shall have effect with respect to the determination of oil fields, and Schedule 2 to this Act shall have effect with respect to the management and collection of the tax; and this Part of this Act shall have effect subject to the further provisions in Schedule 3 to this Act and, in connection with certain gas sold to the British Gas Corporation, to section 10 of this Act.
2 Assessable profits and allowable losses.
(1) For the purposes of the tax the assessable profit or allowable loss accruing to a participator in any chargeable period from an oil field shall be computed in accordance with the following provisions of this section.
(2) The assessable profit or allowable loss so accruing in the period is the difference (if any) between the sum of the positive amounts for the period and the sum of the negative amounts for the period; and that difference (if any) is an assessable profit if the sum of the positive amounts is greater than the sum of the negative amounts, and is otherwise an allowable loss.
(3) For the period—
(a ) the positive amounts for the purposes of this section are the following (as defined in this section), namely the gross profit (if any) accruing to the participator in the period, his licence credit (if any) for the period, and any amount to be credited to him for the period in respect of expenditure; and
(b ) the negative amounts for those purposes are the following (as so defined) namely the gross loss (if any) so accruing, his licence debit (if any) for the period, and any amount to be debited to him for the period in respect of expenditure.
(4) The gross profit or loss (if any) accruing to the participator in the period is the difference (if any) between—
(a ) the aggregate of the amounts mentioned in subsection (5) below; and
(b ) one-half of the market value, at the end of the preceding chargeable period, of so much of his share of oil won from the field as he had then either—
(i) not disposed of and not relevantly appropriated; or
(ii) disposed of but not delivered,
and the difference (if any) is a gross profit if the said aggregate is greater than one-half of the said market value, and is otherwise a gross loss.
(5) The amounts referred to in subsection (4)(a ) above are—
(a ) the price received or receivable for so much of any oil won from the field and disposed of by him crude in sales at arm's length as was delivered by him in the period (excluding oil delivered before 13th November 1974);
(b ) the aggregate market value, ascertained in accordance with Schedule 3 to this Act, of so much of any oil so won and disposed of by him crude otherwise than in sales at arm's length as was delivered by him in the period (excluding oil delivered before 13th November 1974);
(c ) the aggregate market value, ascertained in accordance with Schedule 3 to this Act, of so much of any oil so won as was relevantly appropriated by him in the period without being disposed of (excluding oil so appropriated before 13th November 1974); and
(d ) one-half of the market value, at the end of the period, of so much of his share of oil so won as he had then either—
(i) not disposed of and not relevantly appropriated; or
(ii) disposed of but not delivered.
(6) The participator's licence debit or credit (if any) for the period is the difference (if any) between—
(a ) the sum of the amounts mentioned in subsection (7) below; and
(b ) the sum of—
(ii) the amount of any royalty repaid to the participator in the period in respect of the field;
and that difference (if any) is a licence debit if the sum mentioned in paragraph (a ) above is greater than the sum mentioned in paragraph (b ) above, and is otherwise a licence credit.
(7) The amounts referred to in subsection (6)(a ) above are—
(a ) the amount shown in the return for the period made under paragraph 2 of Schedule 2 to this Act as the amount of royalty payable for the period in respect of the participator's share of oil won from the field;
(b ) the amount of royalty paid in the period in respect of that share; and
(c ) any amount paid in the period in respect of any periodic payment payable to the Secretary of State under any relevant licence otherwise than by way of royalty.
(8) The amount (if any) to be debited or credited to the participator for the period in respect of expenditure is the difference (if any) between—
(a ) the sum of the amounts mentioned in subsection (9) below; and
(b ) subject to subsection (10) below, any amount taken into account under paragraph (a ) of the said subsection (9) in computing the assessable profit or allowable loss accruing to the participator in the last but one preceding chargeable period;
and that difference (if any) is an amount to be debited as aforesaid if the sum mentioned in paragraph (a ) above is greater than the amount mentioned in paragraph (b ) above, and is otherwise an amount to be credited as aforesaid.
(9) The amounts referred to in subsection (8)(a ) above are—
(a ) subject to subsection (11) below, an amount equal to 5 per cent. of the aggregate of—
(b ) the participator's share, as determined on a claim under Schedule 5 to this Act, of the aggregate of—
(i) any expenditure allowable under section 3 or 4 of this Act for the field which has been allowed on such a claim before the Board have made an assessment to tax or a determination on or in relation to him for the period in...
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