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Finance Bill


Finance Bill
Part 2 — Oil

44

 

80      

Annual report

(1)   

For each financial year the Treasury must prepare a report containing the

information in subsection (2).

(2)   

The information is—

(a)   

the number of decommissioning relief agreements entered into in that

5

year,

(b)   

the total number of decommissioning relief agreements in force at the

end of that year,

(c)   

the number of payments made under any decommissioning relief

agreements during that year, and the amount of each payment,

10

(d)   

the total number of payments that have been made under any

decommissioning relief agreements as at the end of that year, and the

total amount of those payments, and

(e)   

an estimate of the maximum amount liable to be paid under any

decommissioning relief agreements.

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(3)   

The report for a financial year must be laid before the House of Commons as

soon as is reasonably practicable after the end of that year.

(4)   

In this section “decommissioning relief agreement” has the same meaning as in

section 78.

(5)   

This section has effect in relation to financial years ending on or after 31 March

20

2014.

81      

Effect of claim on PRT

(1)   

This section applies where a sum is payable to a company (“the claimant”)

under a decommissioning relief agreement.

(2)   

Subsection (3) applies where the reference amount is calculated by reference to

25

what the claimant’s assessable profit in any chargeable period would be if any

expenditure incurred by it were used to reduce its profit in a particular way

(rather than in any way that it has in fact been used).

(3)   

For the purposes of petroleum revenue tax—

(a)   

the expenditure is treated as having been used to reduce the claimant’s

30

profit in that way (rather than in any way that it has in fact been used),

and

(b)   

the claimant is treated as if it had received the tax relief it would receive

if its profit were reduced in that way (so no repayment of tax is to be

made by virtue of this subsection).

35

(4)   

Subsection (5) applies where the reference amount is calculated by reference to

what any other company’s assessable profit in any chargeable period would be

if any expenditure incurred by the claimant—

(a)   

had been incurred by the other company, and

(b)   

were used to reduce the other company’s profit in a particular way.

40

(5)   

For the purposes of petroleum revenue tax—

(a)   

the expenditure is treated as incurred by the other company (and not

the claimant),

(b)   

the expenditure is treated as having been used by the other company to

reduce its profit in that way, and

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Finance Bill
Part 2 — Oil

45

 

(c)   

the other company is treated as if it had received the tax relief it would

receive if its profit were reduced in that way (so no repayment of tax is

to be made by virtue of this subsection).

(6)   

In this section—

“assessable profit” and “chargeable period” have the same meaning as in

5

Part 1 of OTA 1975,

“company” has the meaning given by section 1121 of CTA 2010,

“decommissioning relief agreement” has the same meaning as in section

78, and

“the reference amount” means the reference amount (within the meaning

10

of that section) that relates to the sum mentioned in subsection (1).

82      

Terminal losses accruing by virtue of another’s default

(1)   

This section applies where—

(a)   

a company defaults on a liability under—

(i)   

a relevant agreement, or

15

(ii)   

an abandonment programme,

   

to make a payment towards decommissioning expenditure in respect

of an oil field,

(b)   

in consequence of the default, another company (“the other company”)

that has rights under a decommissioning relief agreement at the time of

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the default incurs decommissioning expenditure in respect of that oil

field, and

(c)   

but for paragraph 15 of Schedule 17 to FA 1980 (terminal losses), a sum

(or a sum of a greater amount) would be payable to the other company

under the decommissioning relief agreement.

25

(2)   

Paragraph 15 of Schedule 17 to FA 1980 does not apply in relation to any

allowable loss accruing to the other company from that oil field.

(3)   

Any allowable unrelievable field loss (within the meaning of section 6 of OTA

1975) that—

(a)   

consists of the unrelieved portion of an allowable loss within

30

subsection (2), and

(b)   

would (in the absence of this subsection) arise as a result of subsection

(2),

   

is not to be regarded as arising.

(4)   

Nothing in this section affects the operation of section 81(3) or (5).

35

(5)   

In this section—

“abandonment programme” means an abandonment programme

approved under Part 4 of the Petroleum Act 1998 (including such a

programme as revised),

“company” has the meaning given by section 1121 of CTA 2010,

40

“decommissioning expenditure” has the same meaning as in section 78,

“decommissioning relief agreement” has the same meaning as in that

section,

“oil field” has the same meaning as in OTA 1975,

“relevant agreement” has the meaning given by section 104(5)(a) of FA

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1991, and

 
 

Finance Bill
Part 2 — Oil

46

 

“unrelieved portion”, in relation to an allowable loss, is to be read in

accordance with section 6 of OTA 1975.

83      

Claims under agreement not to affect oil allowance

(1)   

This section applies where—

(a)   

a company defaults on a liability under—

5

(i)   

a relevant agreement, or

(ii)   

an abandonment programme,

   

to make a payment towards decommissioning expenditure in respect

of an oil field,

(b)   

in consequence of the default, another company that has rights under a

10

decommissioning relief agreement at the time of the default incurs

decommissioning expenditure in respect of that oil field, and

(c)   

by virtue of section 81, any expenditure incurred by that company

(whether or not that decommissioning expenditure) is treated as

having been used by that company or any other company (“the affected

15

company”) to reduce its assessable profit in a chargeable period in a

particular way.

(2)   

If, in the absence of section 81, the assessable profit accruing to the affected

company from an oil field in that chargeable period would be reduced under

section 8(1) of OTA 1975, the amount of the oil allowance for the oil field

20

utilised by the affected company in that chargeable period for the purposes of

section 8 of that Act is to be determined as if section 81 did not apply.

(3)   

In this section—

“abandonment programme” means an abandonment programme

approved under Part 4 of the Petroleum Act 1998 (including such a

25

programme as revised),

“company” has the meaning given by section 1121 of CTA 2010,

“decommissioning expenditure” has the same meaning as in section 78,

“decommissioning relief agreement” has the same meaning as in that

section,

30

“oil field” has the same meaning as in OTA 1975, and

“relevant agreement” has the meaning given by section 104(5)(a) of FA

1991.

Decommissioning security settlements

84      

Removal of IHT charges in respect of decommissioning security settlements

35

(1)   

In Chapter 3 of Part 3 of IHTA 1984 (settled property: settlements without

interests in possession etc), section 58 (relevant property) is amended as

follows.

(2)   

In subsection (1), omit the “and” at the end of paragraph (ea) and before

paragraph (f) insert—

40

“(eb)   

property comprised in a decommissioning security settlement;

and”.

 
 

Finance Bill
Part 2 — Oil

47

 

(3)   

At the end insert—

“(6)   

For the purposes of subsection (1)(eb) above a settlement is a

“decommissioning security settlement” if the sole or main purpose of

the settlement is to provide security for the performance of obligations

under an abandonment programme.

5

(7)   

In subsection (6)—

“abandonment programme” means an abandonment programme

approved under Part 4 of the Petroleum Act 1998 (including

such a programme as revised);

“security” has the same meaning as in section 38A of that Act.”

10

(4)   

This section is treated as having come into force on 20 March 1993.

(5)   

For the purposes of section 58 of IHTA 1984—

(a)   

any reference in that section to Part 4 of the Petroleum Act 1998 has

effect, in relation to any period before the coming into force of that Part,

as a reference to Part 1 of the Petroleum Act 1987, and

15

(b)   

section 38A of the Petroleum Act 1998 is to be treated as having come

into force at the same time as this section.

(6)   

There is to be no charge to tax under section 65 of IHTA 1984 if the only reason

for such a charge would be that property ceases to be relevant property by

virtue of the coming into force of this section.

20

85      

Loan relationships arising from decommissioning security settlements

(1)   

In Part 8 of CTA 2010 (oil activities), after section 287 insert—

“287A   

Restriction where debits or credits relate to decommissioning security

settlement

(1)   

No debits or credits are to be brought into account for the purposes of

25

Part 5 of CTA 2009 (loan relationships) in respect of a company’s loan

relationship so far as the loan relationship is in respect of property

comprised in a decommissioning security settlement.

(2)   

For the purposes of this section a settlement is a “decommissioning

security settlement” if the sole or main purpose of the settlement is to

30

provide security for the performance of obligations under an

abandonment programme.

(3)   

In subsection (2)—

“abandonment programme” means an abandonment programme

approved under Part 4 of the Petroleum Act 1998 (including

35

such a programme as revised), and

“security” has the same meaning as in section 38A of that Act.”

(2)   

In section 464 of CTA 2009 (priority of Part 5 for corporation tax purposes), in

subsection (3)(e), for “and 287” substitute “to 287A”.

(3)   

The amendments made by this section have effect in relation to accounting

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periods beginning on or after the day on which this Act is passed.

 
 

 
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