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Finance Bill


Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 4 — No change in equity share: activation of allowance

331

 

      (2)  

The unactivated amount of that allowance at a particular time (“the relevant

time”) is—

                  (R + E) - (A + D)
                         

           

where—

R is the amount of the field allowance which the company held before

the relevant time by virtue of paragraph 5 or 15(2),

5

E is the total amount of the field allowance received before the relevant

time by virtue of paragraph 15(1) (company already holding field

allowance acquires equity share),

A is the total amount of the field allowance activated in respect of—

(a)   

accounting periods ending before the relevant time, or

10

(b)   

reference periods ending before the relevant time, and

D is the total amount of reductions in the field allowance made before

the relevant time by virtue of paragraph 14 (company disposes of

equity share).

      (3)  

A company ceases to hold a field allowance for a new oil field if the

15

unactivated amount of that allowance falls to nil.

Part 4

No change in equity share: activation of allowance

Introduction

8     (1)  

This Part applies to a company in respect of a new oil field and an accounting

20

period if the following conditions are met.

      (2)  

Condition A is that the company is a licensee in the field for the whole of the

accounting period.

      (3)  

Condition B is that the company’s share of the equity in the field is the same

during the whole of the accounting period.

25

      (4)  

Condition C is that the company holds an unactivated amount of field

allowance for the field at the beginning of the accounting period.

      (5)  

Condition D is that the company has relevant income from the new oil field

in the accounting period.

Activation of field allowance

30

9     (1)  

An amount of the company’s field allowance for the new oil field is to be

activated in respect of the accounting period.

      (2)  

The amount of the field allowance to be activated is the smallest of the

following amounts—

(a)   

the relevant activation limit,

35

(b)   

the company’s relevant income from the field in the accounting

period, and

(c)   

the unactivated amount of the field allowance which the company

holds at the beginning of the accounting period.

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 5 — Change in equity share: activation of allowance

332

 

        

(3)  The relevant activation limit is—

                  T x E x N
                  5        365

           

where—

T is the amount of the total field allowance for the field (see paragraph

24),

E is the company’s share of the equity in the field during the accounting

5

period, and

N is the number of days in the accounting period.

Part 5

Change in equity share: activation of allowance

Introduction

10

10    (1)  

This Part applies to a company in respect of a new oil field and an accounting

period if the following conditions are met.

      (2)  

Condition A is that the company is a licensee in the field for the whole, or for

part, of the accounting period.

      (3)  

Condition B is that the company’s share of the equity in the field is different

15

at different times during the accounting period.

      (4)  

Condition C is that the company holds an unactivated amount of field

allowance for the field at any time during the accounting period.

      (5)  

Condition D is that the company has relevant income from the field in the

accounting period.

20

      (6)  

In a case where a company has three or more different shares of the equity

in a new oil field during a particular day, this Part (in particular provisions

relating to the beginning or end of a day) has effect subject to the necessary

modifications.

Reference periods

25

11    (1)  

For the purposes of this Part, the accounting period, or (if the company is not

a licensee for the whole of the accounting period, the part or parts of the

accounting period for which the company is a licensee, is to be divided into

reference periods.

      (2)  

A reference period is a period of consecutive days that meets the following

30

conditions.

      (3)  

Condition A is that, at the beginning of each day in the period, the company

is a licensee in the new oil field.

      (4)  

Condition B is that, at the beginning of each day in the period, the

company’s share of the equity in the field is the same.

35

      (5)  

Condition C is that, at the beginning of the first day of the period, the

company holds an unactivated amount of field allowance for the field.

      (6)  

Condition D is that each day in the period falls within the accounting period.

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 6 — Change in equity share: transfer of field allowance

333

 

Activation of field allowance

12    (1)  

An amount of the company’s field allowance for the new oil field is to be

activated in respect of each reference period.

      (2)  

The amount of the field allowance to be activated is the smallest of the

following amounts—

5

(a)   

the relevant activation limit,

(b)   

the company’s relevant income from the field in the reference period,

and

(c)   

the unactivated amount of the field allowance which the company

holds at the beginning of the reference period.

10

      (3)  

The relevant activation limit is—

                  T x E x R
                  5        365

           

where—

T is the amount of the total field allowance for the field (see paragraph

24),

E is the company’s share of the equity in the field during the reference

15

period, and

R is the number of days in the reference period.

      (4)  

(4)  The company’s relevant income from the field in the reference period is—

                  I x R
                        L

           

where—

I is the company’s relevant income from the field in the whole of the

20

accounting period;

R is the number of days in the reference period;

L is the number of days in the accounting period for which the

company is a licensee in the new oil field.

Part 6

25

Change in equity share: transfer of field allowance

Introduction

13    (1)  

This Part applies if the following conditions are met.

      (2)  

Condition A is that a company that is a licensee in a new oil field (“the

transferor”) disposes of the whole or a part of its share of the equity in the

30

new oil field (and in this Part each of those to which a share of the equity is

disposed of is referred to as “a transferee”).

      (3)  

Condition B is that, immediately before the disposal, the transferor holds an

unactivated amount of field allowance for the new oil field.

      (4)  

Sub-paragraph (5) applies when—

35

(a)   

determining (for the purposes of this paragraph) whether a

transferor holds an unactivated amount of field allowance

immediately before the disposal (“the relevant time”), and

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 6 — Change in equity share: transfer of field allowance

334

 

(b)   

determining (for the purposes of paragraph 14) the unactivated

amount of field allowance which a transferor holds at the relevant

time;

           

but it applies only if an amount of field allowance for the new oil field (“the

relevant amount”) has, by virtue of paragraph 12, been activated in respect

5

of the reference period that ends because of the disposal.

      (5)  

When making the determination, the relevant amount of the field allowance

must be treated as having been activated at a time before the relevant time.

      (6)  

In a case where a company has three or more different shares of the equity

in a new oil field during a particular day, this Part (in particular provisions

10

relating to the beginning or end of a day) has effect subject to the necessary

modifications.

Reduction of field allowance if equity disposed of

14    (1)  

The unactivated amount of the field allowance for the new oil field which

the transferor holds immediately before the disposal is to be reduced by the

15

following amount—

                  F x E1 - E2
                              E1

           

where—

F is the unactivated amount of the field allowance which the transferor

holds immediately before the disposal,

E1 is the transferor’s share of the equity in the new oil field immediately

20

before the disposal, and

E2 is the transferor’s share of the equity in the new oil field immediately

after the disposal.

      (2)  

This paragraph has effect at the end of the day on which the disposal takes

place.

25

Acquisition of field allowance if equity acquired

15    (1)  

If a transferee holds a field allowance for the new oil field immediately

before the disposal, the unactivated amount of the field allowance is to be

increased by the amount calculated in accordance with sub-paragraph (4).

      (2)  

If a transferee does not hold a field allowance for the new oil field

30

immediately before the disposal, the transferee is to hold a field allowance

for the new oil field.

      (3)  

The amount of the field allowance which the transferee is to hold is

calculated in accordance with sub-paragraph (4).

        

(4)  The amount referred to in sub-paragraphs (1) and (3) is—

              R    x    E3
                      E1 - E2

35

           

where—

R is the amount of the reduction determined in accordance with

paragraph 14,

E3 is the share of the equity in the new oil field that the transferee has

acquired from the transferor, and

40

E1 and E2 are the same as in paragraph 14.

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 8 — Interpretation

335

 

      (5)  

This paragraph has effect at the end of the day on which the disposal takes

place.

Part 7

Miscellaneous

Adjustments

5

16         

If there is any alteration in a company’s adjusted ring fence profits for an

accounting period after this Schedule has had effect in relation to the profits,

any necessary adjustments to the operation of this Schedule (whether in

relation to the profits or otherwise) are to made (including any necessary

adjustments to the effect of Part 1 on the profits or to the calculation of the

10

company’s pool of field allowances for a subsequent accounting period).

Orders

17    (1)  

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

make provision about the oil fields that are qualifying oil fields for the

purposes of this Schedule

15

      (2)  

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

make provision about the amount of the total field allowance for any

description of new oil field (whether or not provision has been made under

sub-paragraph (1) about that description of new oil field).

      (3)  

An order under this paragraph may, in particular, amend any or all of

20

paragraphs 20 to 24.

      (4)  

An order under this paragraph is to be made by statutory instrument.

      (5)  

No order may be made under this paragraph unless a draft of the instrument

containing it has been laid before, and approved by a resolution of, the

House of Commons.

25

Part 8

Interpretation

New oil fields

18         

In this Schedule “new oil field” means an oil field—

(a)   

which is a qualifying oil field, and

30

(b)   

whose development is authorised at any time on or after 22 April

2009.

Authorising development

19    (1)  

In this Schedule a reference to authorisation of development of an oil field is

a reference to a national authority—

35

(a)   

granting a licensee consent for development for the field,

(b)   

serving on a licensee a programme of development for the field, or

(c)   

approving a programme of development for the field.

      (2)  

In this paragraph—

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 8 — Interpretation

336

 

“consent for development”, in relation to an oil field, does not include

consent which is limited to the purpose of testing the characteristics

of an oil-bearing area;

“development”, in relation to an oil field, means winning oil from the

field otherwise than in the course of searching for oil or drilling

5

wells;

“national authority” means—

(a)   

the Secretary of State, or

(b)   

a Northern Ireland Department.

Qualifying oil fields

10

20         

In this Schedule “qualifying oil field” means an oil field that is, on the

authorisation day—

(a)   

a small oil field,

(b)   

an ultra heavy oil field, or

(c)   

an ultra high pressure/high temperature field.

15

Small oil field

21    (1)  

In this Schedule “small oil field” means an oil field which has reserves of oil

of 3,500,000 tonnes or less.

      (2)  

For the purposes of this paragraph and paragraph 24(2)—

(a)   

the amount of reserves of oil which an oil field has is to be

20

determined on the authorisation day;

(b)   

1,100 cubic metres of gas at a temperature of 15 degrees celsius and

pressure of one atmosphere is to be counted as equivalent to one

tonne.

Ultra heavy oil field

25

22    (1)  

In this Schedule “ultra heavy oil field” means an oil field with oil at—

(a)   

an API gravity below 18 degrees, and

(b)   

a viscosity of more than 50 centipoise at reservoir temperature and

pressure.

        

For that purpose API gravity, in relation to oil, is the amount determined by

30

(2)  the following calculation—

                  141.5 - 131.5
                     G

           

where G is the specific gravity of the oil at 15.56 degrees celsius.

Ultra high pressure/high temperature oil field

23         

In this Schedule “ultra high pressure/high temperature oil field” means an

oil field with oil at—

35

(a)   

a pressure of more than 1034 bar in the reservoir formation, and

(b)   

a temperature of more than 176.67 degrees celsius in the reservoir

formation.

 
 

Finance Bill
Schedule 45 — Oil: miscellaneous amendments

337

 

Total field allowance for new oil field

24    (1)  

For the purposes of this Schedule, the total field allowance for a new oil field

is—

(a)   

in the case of a small oil field, the amount determined in accordance

with sub-paragraph (2),

5

(b)   

in the case of an ultra heavy oil field, £800,000,000, and

(c)   

in the case of an ultra high pressure/high temperature oil field,

£800,000,000.

      (2)  

The total field allowance for a small oil field is—

(a)   

if the oil field has reserves of oil of 2,750,000 tonnes or less,

10

£75,000,000, and

(b)   

in any other case (where the oil field has reserves of more than

2,750,000 tonnes but not more than 3,500,000 tonnes), the following

amount—

                  75,000 x 3,500,000 - X
                                   3,500,00 - 2,750,000

   

where X is the amount of the reserves of oil (in tonnes) which the oil

15

field has.

Other interpretation

25         

In this Schedule—

“adjusted ring fence profits”, in relation to a company and an

accounting period, means the adjusted ring fence profits that would

20

(if this Schedule were ignored) be taken into account in calculating

the supplementary charge on the company under section 501A of

ICTA for the accounting period;

“authorisation day”, in relation to a new oil field, means the day when

development of the field is authorised;

25

“initial licensee”, in relation to a new oil field, means a company that is

licensee in the field on the authorisation day.

“licensee” has the same meaning as in Part 1 of OTA 1975;

“oil” has the same meaning as in Part 1 of OTA 1975;

“oil field” has the same meaning as in Part 1 of OTA 1975;

30

“relevant income”, in relation to a new oil field and an accounting

period of a company, means production income of the company

from any oil extraction activities carried on in the field that is taken

into account in calculating the company’s adjusted ring fence profits

for the accounting period.

35

Schedule 45

Section 90

 

Oil: miscellaneous amendments

OTA 1975

1     (1)  

OTA 1975 is amended as follows.

 
 

 
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