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Finance Bill (Volume I)
Part 6 — Oil

60

 

99      

Loan capital

(1)   

Section 79 of FA 1986 (stamp duty and loan capital) is amended as follows.

(2)   

In subsection (6), for “subsection (7)” substitute “subsections (7) to (7B)”.

(3)   

After subsection (7A) insert—

“(7B)   

Subsection (4) shall not be prevented from applying to a capital market

5

instrument by virtue of subsection (6)(b) by reason only that the capital

market investment concerned carries or has carried a right to interest

which ceases or reduces if, or to the extent that, the issuer, after meeting

or providing for other obligations specified in the capital market

arrangement concerned, has insufficient funds available from that

10

capital market arrangement to pay all or part of the interest otherwise

due.”

(4)   

After subsection (12) insert—

“(13)   

In this section—

“capital market instrument” means an instrument transferring a

15

capital market investment issued as part of a capital market

arrangement, and

“capital market investment” and “capital market arrangement”

have the same meaning as in section 72B of the Insolvency Act

1986 (see paragraphs 1 to 3 of Schedule 2A to that Act).”

20

(5)   

The amendments made by this section have effect in relation to any instrument

executed on or after the day on which this Act is passed.

Part 6

Oil

Petroleum revenue tax

25

100     

Meaning of “participator”

(1)   

In section 12 of OTA 1975 (interpretation of Part 1), the definition of

“participator” is amended as follows.

(2)   

In the words before paragraph (a), after “chargeable period” insert “(“the

relevant chargeable period”)”.

30

(3)   

In paragraphs (a), (b) and (c), for “that chargeable period” substitute “the

relevant chargeable period”.

(4)   

At the end of paragraph (c) insert “and

(d)   

a former participator to whom an amount is attributed

under paragraph 2A(2) of Schedule 5 in respect of a

35

default payment made in relation to the field in the

relevant chargeable period; and

(e)   

a former participator to whom an amount was

attributed under paragraph 2A(2) of Schedule 5 in

respect of a default payment made in relation to the field

40

in either of the two chargeable periods preceding the

relevant chargeable period; and

 
 

Finance Bill (Volume I)
Part 6 — Oil

61

 

(f)   

a person who—

(i)   

made a default payment in relation to the field

(whether the person was then a current

participator or former participator),

(ii)   

is not a participator during the relevant

5

chargeable period under any of paragraphs (a) to

(e) of this definition, and

(iii)   

receives, in the relevant chargeable period,

reimbursement expenditure (within the

meaning of section 108(1)(c) of the Finance Act

10

1991) in respect of the default payment; and

(g)   

a person who—

(i)   

made a default payment in relation to the field

(whether the person was then a current

participator or former participator),

15

(ii)   

is not a participator during the relevant

chargeable period under any of paragraphs (a) to

(f) of this definition, and

(iii)   

received, in either of the two chargeable periods

preceding the relevant chargeable period,

20

reimbursement expenditure (within the

meaning of section 108(1)(c) of the Finance Act

1991) in respect of the default payment;

   

and for the purposes of paragraphs (f)(i) and (g)(i),

“current participator”, “former participator” and

25

“default payment” have the same meaning as in

paragraph 2A of Schedule 5;”.

(5)   

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

incurred after 30 June 2008.

101     

Abandonment expenditure: default by participator met by former

30

participator

(1)   

In Schedule 5 to OTA 1975 (allowance of expenditure, other than abortive

exploration expenditure), for paragraph 2A substitute—

“2A   (1)  

This paragraph applies if—

(a)   

a current participator (“the defaulter”) has defaulted on a

35

liability under—

(i)   

a relevant agreement, or

(ii)   

an abandonment programme,

   

to make a payment towards abandonment expenditure, and

(b)   

a current or former participator (“the contributing

40

participator”) pays an amount in or towards meeting the

whole or part of the default (“a default payment”).

      (2)  

If a claim is made under this Schedule for the allowance of the

abandonment expenditure, the amount of the default payment is to

be attributed to the contributing participator for the purposes of

45

paragraphs 2(4)(b) and 3(1)(c).

      (3)  

But the amount attributed under sub-paragraph (2) may not

exceed—

 
 

Finance Bill (Volume I)
Part 6 — Oil

62

 

(a)   

so much of the sum in default as the contributing participator

is required to meet in accordance with—

(i)   

the relevant agreement, or

(ii)   

the abandonment programme, or

(b)   

such other amount as the participator may be required to

5

meet in accordance with a direction given under Part 4 of the

Petroleum Act 1998.

      (4)  

Sub-paragraph (2) is subject to paragraph 2B.

      (5)  

In determining the amount which is to be attributed to the

contributing participator under sub-paragraph (2), account shall be

10

taken of the whole of the defaulter’s interest in the relevant oil field.

      (6)  

But in determining the share of the abandonment expenditure to be

attributed to the defaulter under paragraph 2(4)(b), the amount

which would be attributed by reference to the defaulter’s interest in

the relevant oil field is to be reduced or (as the case may be)

15

extinguished by the deduction of the aggregate of—

(a)   

the amount attributed to the contributing participator under

sub-paragraph (2), and

(b)   

any other amounts attributed under sub-paragraph (2) to

other current or former participators who make default

20

payments in respect of the defaulter’s default.

2B    (1)  

No amount is to be attributed to a contributing participator under

paragraph 2A(2) unless the following conditions are all met.

      (2)  

The first condition is that the contributing participator is not

connected with the defaulter, applying section 839 of the Taxes Act

25

(connected persons) for the purposes of this sub-paragraph.

      (3)  

The second condition is that, at the end of the claim period for which

the claim is made, the defaulter still has an interest in the relevant oil

field which, under paragraph 2(4)(b), falls to be taken into account in

determining the shares in the abandonment expenditure.

30

      (4)  

The third condition is that the relevant participators have taken all

reasonable steps by way of legal remedy—

(a)   

to secure that the defaulter meets the whole of the liability

referred to in paragraph 2A(1)(a), and

(b)   

to enforce any guarantee or other security provided in

35

respect of that liability.

      (5)  

In sub-paragraph (4) “relevant participators” means—

(a)   

each current participator (other than the defaulter), and

(b)   

each former participator who makes a default payment in

respect of the defaulter’s default.

40

2C    (1)  

An amount attributed under paragraph 2A(2) is—

(a)   

in the case of a current participator, to be an addition to the

share of the abandonment expenditure referable to the

current participator’s interest in the oil field, or

(b)   

in the case of a former participator, to be the share of the

45

abandonment expenditure referable to the former

participator’s interest in the oil field.

 
 

Finance Bill (Volume I)
Part 6 — Oil

63

 

      (2)  

In paragraphs 2A and 2B and this paragraph—

“abandonment expenditure” means expenditure which is

allowable for an oil field by virtue of section 3(1)(i) or (j);

“abandonment programme” means an abandonment

programme approved under Part 4 of the Petroleum Act 1998

5

(including any such programme as revised);

“current participator” means a person who is, by virtue of

paragraph (a), (b) or (c) of the definition in section 12, a

participator in the relevant oil field in the chargeable period

in which the abandonment expenditure is incurred;

10

“former participator” means a person who—

(a)   

is not a current participator, but

(b)   

was, by virtue of paragraph (a), (b) or (c) of the

definition in section 12, a participator in the relevant

oil field in any chargeable period before the

15

chargeable period in which the abandonment

expenditure is incurred;

“relevant agreement” has the meaning given by section

104(5)(a) of the Finance Act 1991;

“relevant oil field” means the oil field to which the

20

abandonment expenditure relates;

“sum in default” means the amount of the payment which the

defaulter is liable to make as mentioned in paragraph

2A(1)(a), less the aggregate of—

(a)   

so much of that payment as has been made by the

25

defaulter, and

(b)   

so much of that payment as has been met by virtue of

any guarantee or security provided in respect of the

defaulter’s liability.

      (3)  

For the purposes of paragraph 2A, a current participator is to be

30

regarded as defaulting on a liability to make a payment towards

abandonment expenditure if the following conditions are met.

      (4)  

The first condition is that the current participator has failed to make

the payment in full on the due day.

      (5)  

The second condition is that—

35

(a)   

any of the payment remains unpaid on the sixtieth day after

the due day, or

(b)   

before that sixtieth day, the current participator’s interest in

a relevant licence becomes liable under the relevant

agreement to be sold or forfeited, in whole or in part, by

40

reason of the failure to meet the liability.

      (6)  

In sub-paragraphs (4) and (5) “due day” means the day on which the

payment towards abandonment expenditure becomes due under the

relevant agreement or the abandonment programme.”

(2)   

The amendment made by subsection (1) has effect in relation to expenditure

45

incurred after 30 June 2008.

 
 

 
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