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Finance Bill
Schedule 33 — PRT: elections for oil fields become non-taxable
Part 1 — New Schedule 20A to FA 1993
344

Schedule 33
Section 102

PRT: elections for oil fields become non-taxable
Part 1
New Schedule 20A to FA 1993
1
This is Schedule 20A to be inserted before Schedule 21 to FA 1993—
5
“SCHEDULE 20A
PRT: elections for oil fields to become non-taxable
Election by responsible person
1     (1)
The responsible person for a taxable field may make an election
that the field is to be non-taxable.
10
      (2)
An election is irrevocable.
      (3)
The responsible person may not make an election unless each
person who is a participator at the time the election is made agrees
to the election being made.
      (4)
If the responsible person makes an election, the Commissioners
15
may assume that each participator agrees to the election being
made (unless it appears to the Commissioners that a participator
does not agree).
Decision by Commissioners
2     (1)
If an election is made, the Commissioners must decide whether or
20
not the field is no longer taxable.
      (2)
For the purposes of this paragraph, the field is no longer taxable if
it appears to the Commissioners that one or other of the following
conditions is met in relation to each future chargeable period.
      (3)
Condition A is that no assessable profit will accrue to any
25
participator in the field in that period.
      (4)
Condition B is that the assessable profit accruing to each
participator in the field in that period will be equal to, or smaller
than, the cash equivalent of that participator’s share of the oil
allowance for the field in that period.
30
      (5)
The responsible person must give the Commissioners such
information as the Commissioners may reasonably require in
connection with their making a decision under sub-paragraph (1).
      (6)
The Commissioners may make such assumptions as they think
appropriate for the purposes of making a decision under this
35
paragraph (including assumptions about what, if any,
participators there will be in the field in future chargeable
periods).
      (7)
In this paragraph—

Finance Bill
Schedule 33 — PRT: elections for oil fields become non-taxable
Part 1 — New Schedule 20A to FA 1993
345

“assessable profit” means assessable profit before any
reduction under section 7 of OTA 1975 (relief for allowable
losses);
“future chargeable period”, in relation to a decision by the
Commissioners under this paragraph, means a chargeable
5
period that falls at any time after the chargeable period in
which the Commissioners make that decision.
3     (1)
The Commissioners must give the responsible person notice of
their decision under paragraph 2(1).
      (2)
Within one month of being given notice by the Commissioners of
10
their decision, the responsible person must give copies of the
notice to each person who is a participator, or a former
participator, at the time the Commissioners’ notice is given.
      (3)
But the responsible person is not required to give notice to any
person to whom it would be impracticable to give notice.
15
When election has effect
4     (1)
An election does not have effect unless the Commissioners decide
under paragraph 2(1) that the field is no longer taxable.
      (2)
In such a case, the election has effect from the start of the first
chargeable period to begin after the Commissioners give notice
20
under paragraph 3.
      (3)
The election then continues to have effect indefinitely (unless
cancelled in accordance with paragraph 6).
No unrelievable field losses from field
5
For as long as the election has effect, no allowable loss that accrues
25
from the oil field is an allowable unrelievable field loss for the
purposes of petroleum revenue tax.
Cancellation of election by Commissioners
6     (1)
The Commissioners may cancel an election if, within 3 years of
their giving notice under paragraph 3, it appears to them that—
30
(a)
information that the responsible person gave the
Commissioners in connection with the election was
inaccurate or incomplete at the time it was given, and
(b)
if the information had not been inaccurate or incomplete,
the Commissioners would not have made the decision that
35
they made under paragraph 2.
      (2)
For the purposes of sub-paragraph (1) it does not matter whether
or not the Commissioners required the information to be given.
7     (1)
If the Commissioners cancel an election, they must give notice of
the cancellation—
40
(a)
to the person who made the election, or
(b)
if it is impracticable to give notice to that person, to a
person who is a participator at the time the election is
cancelled, or

Finance Bill
Schedule 33 — PRT: elections for oil fields become non-taxable
Part 1 — New Schedule 20A to FA 1993
346

(c)
if it is impracticable to give notice to any such person, to a
person who is a former participator at the time the election
is cancelled;

but the Commissioners are not required to give notice to a person
falling within paragraph (c) if it would be impracticable to give
5
notice to any such person.
      (2)
Within one month of being given notice by the Commissioners
under sub-paragraph (1), the person must give copies of the notice
to each person who is a participator, or a former participator, at
the time the Commissioners’ notice is given.
10
      (3)
But that person is not required to give notice to any person to
whom it would be impracticable to give notice.
Effect of cancellation
8     (1)
If the Commissioners cancel an election under paragraph 6, the
election is to be treated as though it had never had effect.
15
      (2)
But that does not make a person liable for anything that the person
did, or did not do, in consequence of the election having effect
before its cancellation.
      (3)
If the Commissioners cancel an election, the enactments relating to
petroleum revenue tax apply to the oil field subject to sub-
20
paragraphs (4) to (7).
      (4)
The Commissioners may specify the periods within which PRT
returns for the relevant chargeable periods must be delivered.
      (5)
If the Commissioners specify the period within which a PRT
return must be delivered, the provisions of OTA 1975 set out in
25
sub-paragraph (6) apply to the specified period as if it were a
period for the delivery of a PRT return that has been extended
under paragraph 2 or 5 of Schedule 2 to OTA 1975.
      (6)
The provisions of OTA 1975 referred to in sub-paragraph (5) are—
(a)
paragraph 12A of Schedule 2, and
30
(b)
paragraph 2(7) and (8) of Schedule 5 (including those
provisions as applied to Schedule 6 to OTA 1975 by
paragraph 2 of Schedule 6).
      (7)
For the purposes of paragraph 4 of Schedule 2 to OTA 1975, the
“initial period” is the period of thirty days beginning with the date
35
on which the Commissioners give notice in accordance with
paragraph 6 of this Schedule.
      (8)
The Commissioners may by regulations make transitional
provision (including provision modifying enactments) applicable
to cases where elections are made and subsequently cancelled
40
under this Schedule.
      (9)
Regulations under sub-paragraph (8)—
(a)
are to be made by statutory instrument, and
(b)
are subject to annulment in pursuance of a resolution of the
House of Commons.
45

Finance Bill
Schedule 33 — PRT: elections for oil fields become non-taxable
Part 1 — New Schedule 20A to FA 1993
347

     (10)
In this paragraph—
“PRT return” means a return under paragraph 2 or 5 of
Schedule 2 to OTA 1975;
“relevant chargeable periods”, in relation to a cancelled
election, means the series of consecutive chargeable
5
periods that—
(a)
begins with the chargeable period from the start of
which the election had effect, and
(b)
ends with the chargeable period during which the
election is cancelled.
10
Appeals
9     (1)
The responsible person may appeal against a decision of the
Commissioners under paragraph 2(1).
      (2)
Any such appeal must be made within 3 months of the
Commissioners giving notice under paragraph 3 of their decision
15
to the responsible person.
10    (1)
A person who is a participator, or a former participator, at the time
the Commissioners cancel an election under paragraph 6 may
appeal against the cancellation.
      (2)
Any such appeal must be made within 3 months of the
20
Commissioners giving notice under paragraph 7 of the
cancellation (whether or not the notice was given to the person
making the appeal).
11    (1)
Any appeal under paragraph 9 or 10 must be made to the
Commissioners—
25
(a)
by notice in writing, or
(b)
in any other form authorised by direction of the
Commissioners.
      (2)
Any appeal under paragraph 9 or 10 is to be determined by the
Special Commissioners.
30
Interpretation
12    (1)
In this Schedule—
“Commissioners” means the Commissioners for Her
Majesty’s Revenue and Customs (except in the expression
“Special Commissioners”);
35
“election” means an election in writing, or in any other form
authorised by direction of the Commissioners, made to the
Commissioners;
“former participator”, in relation to a particular time, means
a person who—
40
(a)
is not a participator in the chargeable period which
includes that time, but
(b)
was a participator in any earlier chargeable period;
“OTA 1975” means the Oil Taxation Act 1975;

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Schedule 34 — Oil decommmissioning expenditure: consequential amendments
348

“participator”, in relation to a particular time, means a person
who is a participator in the chargeable period which
includes that time.
      (2)
Expressions used in this Schedule and in Part 1 of OTA 1975 have
the same meaning in this Schedule as in that Part of OTA 1975.”
5
Part 2
Other amendments
OTA 1975
2
In section 6 of OTA 1975 (allowances of unrelievable loss from abandoned
field), in subsection (1A), after “this Act” insert “and paragraph 5 of
10
Schedule 20A to the Finance Act 1993”.
FA 1980
3
In Schedule 17 to FA 1980 (transfers of interests in oil fields), in paragraph
15 (terminal losses), after sub-paragraph (9) insert—
   “(9A)
This paragraph is subject to paragraph 5 of Schedule 20A to the
15
Finance Act 1993.”
Oil Taxation Act 1983
4
In section 9 of the Oil Taxation Act 1983 (c. 56) (tariff receipts allowance), in
subsection (5)(a), for the words from “other than” to the end substitute
“other than—
20
(i)
the principal field, or
(ii)
an oil field that is a non-taxable field by virtue of
section 185(1) or (1A) of the Finance Act 1993.”
Schedule 34
Section 104

Oil decommmissioning expenditure: consequential amendments
25
ICTA
1
In section 393A of ICTA (losses: set off against profits), in subsections (2C)(b)
and (11)(a), for “abandonment expenditure” substitute “general
decommissioning expenditure”.
CAA 2001
30
2
CAA 2001 is amended as follows.
3
In section 26 (demolition costs), in subsection (5), for “abandonment
expenditure” substitute “general decommissioning expenditure”.
4
In section 57 (available qualifying expenditure), in the entry in subsection (2)
relating to section 165(3) of CAA 2001, for “abandonment expenditure”
35
substitute “general decommissioning expenditure”.

Finance Bill
Schedule 35 — Set off against oil profits: minor and consequential amendments
349

5     (1)
Section 164 (abandonment expenditure incurred before cessation of ring
fence trade) is amended as follows.
      (2)
In the title, for “abandonment expenditure” substitute “general
decommissioning expenditure”.
      (3)
In subsections (1), (2)(a), (3)(a), (4)(a) and (5), for “abandonment
5
expenditure” substitute “general decommissioning expenditure”.
6     (1)
Section 165 (abandonment expenditure within 3 years of ceasing ring fence
trade) is amended as follows.
      (2)
In the title, for “abandonment expenditure” substitute “general
decommissioning expenditure”.
10
      (3)
In subsection (1)(b) and (c), for “abandonment expenditure” substitute
“general decommissioning expenditure”.
      (4)
In subsection (3)—
(a)
in paragraph (a), for “relevant abandonment cost” substitute
“relevant decommissioning cost”, and
15
(b)
in paragraph (b), for “abandonment expenditure” substitute “general
decommissioning expenditure”.
      (5)
In subsection (4), in the definition of “the relevant abandonment cost”—
(a)
for “relevant abandonment cost” substitute “relevant
decommissioning cost”, and
20
(b)
for “abandonment expenditure” in each place substitute “general
decommissioning expenditure”.
Schedule 35
Section 106

Set off against oil profits: minor and consequential amendments
TMA 1970
25
1
In section 87A of TMA 1970 (interest on overdue corporation tax), in
subsection (6)(a), after “set off” insert “(whether under section 393A(1) or
393B(3))”.
ICTA
2
ICTA is amended as follows.
30
3
In section 343 (company reconstructions without change of ownership), in
subsection (3), after “section 393A(1)” insert “(including a case where section
393B applies)”.
4
In section 393 (losses other than terminal losses), in subsection (1), for the
words after “cannot” substitute “be relieved under this subsection, or (if a
35
claim is made under section 393A(1)) under section 393A(1) or 393B(3),
against income or profits of an earlier accounting period.”
5
In section 393A (losses: set off against profits of the same, or an earlier,

Finance Bill
Schedule 35 — Set off against oil profits: minor and consequential amendments
350

accounting period), after subsection (2C) insert—
“(2D)
Section 393B makes further provision about setting off losses in cases
where subsection (2C) applies.”
6
In section 768A (change in ownership: disallowance of carry back of trading
losses), in subsection (1), after “section 393A(1)” insert “or 393B(3)”.
5
7
In section 826 (interest on tax overpaid), in subsection (7A)(b), after “set off”
insert “(whether under section 393A(1) or 393B(3))”.
8     (1)
Schedule 19B (petroleum extraction activities: exploration expenditure
supplement) is amended as follows.
      (2)
In paragraph 1 (provision about the Schedule), in sub-paragraph (7)(b), after
10
“section 393A” insert “or 393B”.
      (3)
In paragraph 17 (ring fence losses and qualifying E&A losses), in sub-
paragraph (2)—
(a)
the words after “assumed” become sub-paragraph (a), and
(b)
at the end of that sub-paragraph insert “and—
15
(b)
that (where appropriate) section 393B applies in
relation to every such claim.”
9     (1)
Schedule 19C (petroleum extraction activities: ring fence expenditure
supplement) is amended as follows.
      (2)
In paragraph 1 (provision about the Schedule), in sub-paragraph (6)(b), after
20
“section 393A” insert “or 393B”.
      (3)
In paragraph 17 (ring fence losses)—
(a)
in sub-paragraph (2), for “assumption is” substitute “assumptions
are”,
(b)
in sub-paragraph (3), for “The assumption” substitute “The first
25
assumption”, and
(c)
after that sub-paragraph insert—
   “(3A)
The second assumption is that (where appropriate) section
393B applies in relation to every such claim under section
393A.”
30
FA 2000
10    (1)
Schedule 20 to FA 2000 (tax relief for expenditure on research and
development) is amended as follows.
      (2)
In paragraph 15 (entitlement to R&D tax credit)—
(a)
in sub-paragraph (4)(b), after “section 393A(1)(b)” insert “or
35
393B(3)”, and
(b)
in sub-paragraph (5)(b), after “section 393A(1)(b)” insert “or
393B(3)”.
      (3)
In paragraph 23 (treatment of deemed trading loss), in sub-paragraph (2),
after “section 393A(1)(b)” insert “or 393B(3)”.
40