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Finance (No.2) Bill


Finance (No.2) Bill
Part 4 — Real Estate Investment Trusts

117

 

141     

Effect of deemed disposal and re-acquisition

A deemed disposal and re-acquisition of an asset under this Part shall have

effect for the purposes of any subsequent disposal of the asset (whether actual

or deemed).

142     

Interpretation

5

In this Part—

(a)   

a reference to an asset includes a reference to—

(i)   

part of an asset, and

(ii)   

an interest in, or right in relation to, an asset,

(b)   

a reference to assets used in business of a company includes a reference

10

to assets—

(i)   

which were acquired for the purpose of that business and which

are not being used in another business,

(ii)   

which are available for use in that business, or

(iii)   

which are in any other way held in respect of, or associated or

15

connected with, that business,

(c)   

“company” has the meaning given by section 170(9) of TCGA 1992,

(d)   

“international accounting standards” has the meaning given by section

50(2) of FA 2004,

(e)   

“market value” has the same meaning as in TCGA 1992 (see sections

20

272 and 273 and Schedule 11), and

(f)   

“profits” means income (except where the context otherwise requires).

143     

Section 139 TCGA 1992

Section 139 of TCGA 1992 (reconstruction involving transfer of business) shall

not apply to a scheme of reconstruction if a company or group becomes or

25

ceases to be a company or group to which this Part applies in the course of

arrangements of which the scheme forms part.

144     

Housing investment trusts: repeal

Section 160 of, and Schedule 30 to, FA 1996 (housing investment trusts) shall

cease to have effect (and accordingly—

30

(a)   

sections 508A and 508B of ICTA shall cease to have effect,

(b)   

the amendments of section 842(1)(a) and (e) of ICTA effected by

paragraph 2(2) of Schedule 30 shall cease to have effect, and

(c)   

section 842(1AA) of ICTA shall cease to have effect).

General

35

145     

Regulations

Regulations under this Part—

(a)   

may make provision which applies generally or only in specified cases

or circumstances,

(b)   

may make different provision for different cases or circumstances, and

40

(c)   

may include incidental, consequential or transitional provision.

 
 

Finance (No.2) Bill
Part 5 — Oil

118

 

146     

Commencement

(1)   

A notice under section 109 may be given in respect of an accounting period

beginning on or after 1st January 2007.

(2)   

Section 144 shall have effect in relation to accounting periods beginning on or

after the day on which this Act is passed.

5

Part 5

Oil

New basis for determining market value

147     

New basis for determining the market value of oil

(1)   

In OTA 1975, in Schedule 3 (petroleum revenue tax: miscellaneous provisions)

10

before paragraph 2 (definition of market value of oil) insert—

“Determination of market value: the notional delivery day for a quantity of oil

1A    (1)  

This paragraph has effect for determining, for the purposes of this

Schedule, the day which is the “notional delivery day” in the case of

any particular quantity of oil of any particular kind whose market

15

value falls to be determined in accordance with the provisions of this

Schedule in the case of any chargeable period.

      (2)  

The notional delivery day need not be a day in the chargeable period.

      (3)  

In the case of a quantity of oil which, at the end of the chargeable

period,—

20

(a)   

has neither been disposed of nor relevantly appropriated in

the period, or

(b)   

has been disposed of but not delivered in the period,

           

the notional delivery day is the last business day of the chargeable

period.

25

      (4)  

In the case of—

(a)   

a quantity of oil won and disposed of which is delivered on a

day in the chargeable period, or

(b)   

a quantity of oil—

(i)   

relevantly appropriated on a day in the chargeable

30

period, but

(ii)   

not disposed of in the chargeable period,

           

the notional delivery day is to be determined in accordance with sub-

paragraphs (5) to (7) below.

      (5)  

If that oil is—

35

(a)   

oil transported by ship from the place of extraction to a place

in the United Kingdom or elsewhere, or

(b)   

oil transported by pipeline to a place in the United Kingdom

and loaded on to a ship there,

           

and there is a loading slot for it (see sub-paragraph (8)), the notional

40

delivery day is the middle day of the loading slot.

 
 

Finance (No.2) Bill
Part 5 — Oil

119

 

      (6)  

If sub-paragraph (5) above does not apply to that oil, then—

(a)   

if it is oil delivered on a day in the chargeable period, the

notional delivery day is the date of the delivery, or

(b)   

if it is oil relevantly appropriated on a day in the chargeable

period, the notional delivery day is the date of the

5

appropriation.

      (7)  

The Treasury may by regulations make provision for or in

connection with substituting as the notional delivery day in such

circumstances as may be prescribed—

(a)   

in the case of oil transported by ship from the place of

10

extraction to a place in the United Kingdom or elsewhere, the

date of completion of load, or

(b)   

in the case of oil transported by pipeline to a place in the

United Kingdom and loaded on to a ship there, the date of the

bill of lading.

15

      (8)  

The “loading slot” for any oil is the period of three days within which

the loading of the oil on to the ship is or was to take place—

(a)   

as duly published by the operator of the facility at which that

loading is or was to take place (unless paragraph (b) below

applies), or

20

(b)   

as subsequently finally duly varied to give effect to any

modifications duly notified to that operator by the

participator concerned.

      (9)  

In sub-paragraph (8) above, “duly” means in accordance with the

arrangements for the time being governing the time and manner of—

25

(a)   

publication, or variation, of the final loading schedule for the

calendar month in which loading is or was to take place, or

(b)   

notification of modifications to that schedule,

           

and, in any case, before the end of the calendar month immediately

preceding that in which loading is to take place.

30

     (10)  

If the Treasury consider that, for the purpose of defining “loading

slot”, any period of days for the time being specified by or under this

Act as the period of days within which loading of oil on to a ship is

to take place is, or is to be, no longer appropriate, they may by

regulations make provision for, or in connection with,—

35

(a)   

varying the number of days in the period,

(b)   

determining the day that is to be the notional delivery day if

the number, as varied, is an even number.

           

The power conferred by this sub-paragraph includes power to make

amendments to, or modifications of, this Schedule.”.

40

(2)   

Paragraph 2 of that Schedule (definition of market value of oil) is amended as

follows.

(3)   

In sub-paragraph (1) (market value of oil in any calendar month to be

determined in accordance with the paragraph) for “any oil in any calendar

month” substitute “any particular quantity of oil of any kind on any day”.

45

(4)   

After sub-paragraph (1) insert—

   “(1A)  

This paragraph makes different provision according to whether the

oil is—

 
 

Finance (No.2) Bill
Part 5 — Oil

120

 

(a)   

Category 1 oil of any kind, or

(b)   

Category 2 oil of any kind.

     (1B)  

For the purposes of this Act—

(a)   

Category 1 oil is oil of any of one or more kinds specified as

such in regulations made for the purpose by the Board;

5

(b)   

Category 2 oil is oil of any other kind.

     (1C)  

The Board may specify oil of any particular kind as Category 1 oil

only if they are satisfied that reports of prices for sales of oil of that

kind are published and widely available (whether or not on payment

of a fee).”.

10

(5)   

For sub-paragraph (2) substitute—

    “(2)  

The market value of any particular quantity of Category 1 oil of any

kind is the price for which that quantity of oil of that kind might

reasonably have been expected to be sold under a contract of sale

that meets the following conditions—

15

(a)   

the contract is for the sale of the oil at arm’s length to a willing

buyer;

(b)   

the contract is for delivery of a single standard cargo of the

oil;

(c)   

the contract specifies a period of three days within which

20

loading of the oil is to take place and that period includes the

notional delivery day for the actual oil;

(d)   

the contract requires the oil to have been subjected to

appropriate initial treatment before delivery;

(e)   

the contract requires the oil to be delivered—

25

(i)   

in the case of oil extracted in the United Kingdom, at

the place of extraction; or

(ii)   

in the case of oil extracted from strata in the sea bed

and subsoil of the territorial sea of the United

Kingdom or of a designated area, at the place in the

30

United Kingdom or another country at which the

seller could reasonably be expected to deliver it or, if

there is more than one such place, the one nearest to

the place of extraction.

           

The terms as to payment which are to be implied in the contract are

35

those which are customarily contained in contracts for the sale at

arm’s length of oil of the kind in question.

    (2AA)  

The market value of any particular quantity of Category 2 oil of any

kind is the price for which that quantity of oil of that kind might

reasonably have been expected to be sold under a contract of sale

40

that meets the following conditions—

(a)   

the contract is for the sale of the oil at arm’s length to a willing

buyer;

(b)   

the contract provides for delivery of the oil on the notional

delivery day for the actual oil or within such period that

45

includes that day as is normal under a contract at arm’s

length for the sale of oil of that kind (or, if there is more than

one such period, the shortest of them);

 
 

Finance (No.2) Bill
Part 5 — Oil

121

 

(c)   

the contract is made on a date such that the period between

that date and the notional delivery day for the actual oil is the

normal period between contract and delivery in the case of a

contract at arm’s length for the sale of oil of that kind (or, if

there is more than one such period, the shortest of them);

5

(d)   

the contract requires the oil to have been subjected to

appropriate initial treatment before delivery;

(e)   

the contract requires the oil to be delivered—

(i)   

in the case of oil extracted in the United Kingdom, at

the place of extraction; or

10

(ii)   

in the case of oil extracted from strata in the sea bed

and subsoil of the territorial sea of the United

Kingdom or of a designated area, at the place in the

United Kingdom or another country at which the

seller could reasonably be expected to deliver it or, if

15

there is more than one such place, the one nearest to

the place of extraction.

           

The terms as to payment which are to be implied in the contract are

those which are customarily contained in contracts for the sale at

arm’s length of oil of the kind in question.”.

20

(6)   

For sub-paragraphs (2A) to (2D) substitute—

   “(2E)  

For the purposes of sub-paragraph (2) or (2AA) above, the price of

any quantity of Category 1 or Category 2 oil of any kind shall be

determined in such manner, on the basis of such information, and by

reference to such factors, as may be prescribed for oil of that

25

Category and kind in regulations made by the Board.

     (2F)  

The provision that may be made by regulations under subsection

(2E) above includes provision for or in connection with any or all of

the following—

(a)   

determining the price by reference to prices, or an average of

30

prices, for sales of oil (whether or not oil of the Category or

kind in question, and whether the prices are prices under

actual contracts, prices that are published and widely

available (whether on payment of a fee or otherwise) or

prices ascertained or determined in some other way);

35

(b)   

the prices to be taken into account;

(c)   

the descriptions of contracts to be taken into account;

(d)   

the method to be used for determining an average of prices;

(e)   

the day or days, or period or periods, by reference to which

prices, or any average of prices, is to be determined;

40

(f)   

the application of a prescribed price differential, in cases

where the price of oil of one kind falls to be determined in

whole or in part by reference to prices for oil of some other

kind.

     (2G)  

Sub-paragraph (2I) below has effect if, or in so far as, the Board are

45

satisfied that it is impracticable or inappropriate to determine for the

purposes of sub-paragraph (2) or (2AA) above the price of any oil in

accordance with the provisions of regulations for the time being in

force under sub-paragraph (2E) above.

 
 

Finance (No.2) Bill
Part 5 — Oil

122

 

     (2H)  

For that purpose it is immaterial whether the impracticability or

inappropriateness is by virtue of—

(a)   

an insufficiency of contracts or published prices that satisfy

the conditions,

(b)   

an insufficiency of information relating to such contracts or

5

published prices, or

(c)   

the nature of the market for oil of the kind in question,

           

or for any other reason.

     (2I)  

Where this sub-paragraph has effect, the price is to be determined—

(a)   

so far as it is practicable and appropriate to do so by reference

10

to other contracts or published prices (whether or not relating

to oil of the same kind) and in accordance with the principles

set out in the regulations for determining an average of

prices; and

(b)   

so far as it is not practicable or appropriate to determine it as

15

mentioned in paragraph (a) above, in such other manner as

appears to the Board to be appropriate in the circumstances.”.

(7)   

Omit sub-paragraph (3) (which relates to the market value of disposals in a

calendar month).

(8)   

In sub-paragraph (3A) (oil that has been subjected to initial treatment)—

20

(a)   

for “sub-paragraphs (1) and (2) above” substitute “sub-paragraph (1)

and sub-paragraph (2) or (2AA) above”, and

(b)   

for “sub-paragraph (2)(a) above” substitute “sub-paragraph (2)(d) or

(2AA)(d) above”.

(9)   

In sub-paragraph (4) (application of sub-paragraphs (2) and (3) in relation to

25

paragraph 2(2) of Schedule 2) for “sub-paragraphs (2) and (3)” substitute “sub-

paragraphs (2) and (2AA)”.

(10)   

After paragraph (4) insert—

    “(5)  

In this paragraph “prescribed” means specified in, or determined in

accordance with, regulations.”.

30

(11)   

Schedule 18 (which makes minor and consequential amendments) has effect.

148     

Section 147: commencement and transitional provisions

(1)   

The amendments made by section 147 and Schedule 18 have effect in relation

to oil delivered or appropriated on or after 1st July 2006 (disregarding section

12A of that Act).

35

(2)   

Those amendments also have effect for the purpose of determining for any

chargeable period ending on or after 31st December 2006—

(a)   

the value to be brought into account under section 2(4)(b) of OTA 1975

by reference to a previous chargeable period ending on or after 30th

June 2006, and

40

(b)   

the value to be brought into account under section 2(5)(d) of that Act.

(3)   

Subsections (1) and (2) are subject to any express provision in Schedule 18 as to

the commencement or application of any provision of that Schedule.

(4)   

In the following provisions of this section—

 
 

Finance (No.2) Bill
Part 5 — Oil

123

 

(a)   

“the last old period” means the chargeable period that ends on 30th

June 2006, and

(b)   

“the first new period” means the chargeable period that ends on 31st

December 2006.

(5)   

Subsection (6) applies in relation to oil which was won from an oil field before

5

1st July 2006 and which—

(a)   

was loaded on to a ship before 1st July 2006 and transported from the

place of extraction to a place in the United Kingdom or elsewhere, or

(b)   

was transported by pipeline from the place of extraction to a place in

the United Kingdom and there loaded on to a ship before that date.

10

(6)   

If the oil is or was disposed of crude by a participator in sales otherwise than

at arm’s length, but the market value of the oil—

(a)   

does not fall to be brought into account for the purposes of section

2(5)(b) of OTA 1975 for the last old period by reason only that the oil

was not delivered in that period, and

15

(b)   

would not (apart from this subsection) fall to be brought into account

for the purposes of that provision in the first new period by reason only

that the date on which the oil is to be regarded by virtue of section 12A

of that Act as delivered falls in the last old period,

   

the date on which the oil is to be taken for the purposes of section 2(5)(b) of that

20

Act to have been delivered is instead to be the first business day of the first new

period.

(7)   

Any power to make regulations that is conferred under or by virtue of any of

the amendments made by section 147 or Schedule 18 includes power to make

regulations having effect for, or in relation to,—

25

(a)   

the first new period, or

(b)   

for the purpose mentioned in subsection (2), the last old period,

   

notwithstanding that the period in question has begun or ended before the

making of the regulations.

(8)   

Any regulations made by virtue of subsection (7) must be made before 31st

30

December 2006.

Attribution of blended crude oil

149     

Crude oil: power to make regulations

(1)   

In section 2(5) of OTA 1975 (profits from oil field) for “subsection (5A)”

substitute “subsections (5A) and (5B)”.

35

(2)   

After section 2(5A) of that Act insert—

“(5B)   

The Commissioners for Her Majesty’s Revenue and Customs may by

regulations make provision for the purposes of subsection (5)(a) to (c)

for determining to which fields and in what proportions blended oil to

which subsection (5C) applies is attributable.

40

(5C)   

This section applies to blended oil within the meaning of section 63(1A)

of the Finance Act 1987 (other than light gases) which—

(a)   

is not gaseous at a temperature of 15 degrees Centigrade and a

pressure of one atmosphere, and

 
 

 
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